Samsung workers reject $340,000 bonus, threaten strike that could shake global AI chip supply

Samsung chip workers reject $340,000 one-time bonus, demand annual payouts like SK hynix's $900,000 -- workers want share of AI windfall, impending 18-day strike could cost Samsung up to $11.7 billion

Samsung semiconductor workers want a bigger slice of the AI pie. Negotiations between the National Samsung Electronics Union, which represents workers in the company's chipmaking division, and management have seemingly broken down over a single issue. According to the Financial Times, the two sides are close to agreeing on an allocation of 13% of operating profit, which works out to be roughly $340,000 USD per employee, as a bonus to the workers. However, company management is only willing to give this as a one-time offer, while the union wants the allocation to be guaranteed annually and included in the agreement that the two sides will sign. The issue about the bonus was brought to national attention when more than 30,000 Samsung workers took to the streets in late April to demand a bigger slice of the profits that Samsung is making from the AI infrastructure buildout. This demand stemmed from a comparison with SK hynix workers, who were guaranteed bonuses of $477,000 each this year, and almost doubled to $900,000 next year. Furthermore, these bonuses are guaranteed for the next ten years. The massive amount stemmed from the windfall that the memory and storage chip manufacturer is making from the AI infrastructure build-out, with AI data centers and hyperscalers willing to pay a premium just to secure the chips they need. The workers argue that even though Samsung is much larger, their bonuses only equate to less than 30% than what SK hynix offers to its people. Their initial demand was a 15% cut in the semiconductor fab's operating profit, a removal of the 50% bonus cap, and a 7% wage hike, while management countered with a 10% allocation, a 6.2% pay increase, and other benefits like preferential mortgage rates. It seems that the two sides have finally settled on the 13% bonus allocation, and the only question remaining is whether management will agree to a guaranteed annual bonus. Samsung is facing the threat of a massive strike if the two parties fail to come to an agreement. The union said that it will conduct a general strike from May 21 to June 7 -- meaning Samsung's chip fab operations will be crippled for at least 18 days. It should be noted that the single-day action in April resulted in a 58% drop in production for just a single shift. Prof. Kwon Seok-joon of Sungkyunkwan University told the Financial Times that an action like this could cost Samsung somewhere between $6.9 billion and $11.7 billion in direct losses, with an even larger amount in indirect costs. Furthermore, it will damage Samsung's reputation as a supplier for HBM4 chips, especially with the tight competition between the three major memory and storage chip manufacturers. Kwon also noted that it's harder for Samsung to just grant the bonus, even if it comes from operating profits and not revenue. Unlike SK hynix, which is a standalone fab, Samsung's semiconductor fab operates under the larger Samsung Electronics company, which itself is part of the larger Samsung Group. Other arms of the company are said to be struggling because of the higher costs brought about by the chip shortage, even as the semiconductor division is making record profits. If the fab workers get their desired bonus, workers from less profitable divisions might feel that they're being short-changed. Because of this, a smaller union, whose members mostly come from Samsung's smartphone, TV, and home appliances lines, has reportedly pulled out of the planned joint strike. Should management grant the semiconductor division's demand for a bonus allocation of 15% of operating profits, Kwon told FT that "the maths gets uncomfortable fast." Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

Pay dispute backs Samsung into a tight corner

HONG KONG, May 13 (Reuters Breakingviews) - Samsung Electronics' (005930.KS), opens new tab will need to be more generous if it is to avoid falling behind again in the artificial intelligence race. The $1.2 trillion company, South Korea's largest employer, is under pressure to match a pledge by its chip-making rival, SK Hynix (000660.KS), opens new tab, to pay richer, longer-term bonuses. At stake is its ability to retain talent. The handset-to-chip manufacturer had its first taste of worker revolt in 2024, when a union representing roughly 28,000 workers - roughly a fifth of Samsung's workforce at the time - went on strike for nearly a month. The financial and business impact was manageable and the company didn't appear to concede to any major demands of higher wages. The stakes this time will be much higher. Union members, now numbering more than 90,000, or 70% of the conglomerate's workforce, want Samsung to allocate 15% ⁠of annual operating profit to bonuses, among other demands. Based on average analyst forecasts compiled by Visible Alpha, the company would be on the hook to pay an average of $46 billion annually in performance incentives over the next five years. Workers have threatened a 21-day walkout at the end of May but the bigger risk for Samsung may be defections. Last year, cross-town rival SK Hynix agreed to scrap bonus caps and allocate 10% of annual operating profit to the performance pool for the next 10 years - a move that has emboldened unions across Korea Inc. Samsung may not want to promise bigger payouts to staff because some of its divisions, such as its home appliances units, are underperforming. The diverging prospects within the listed company has even prompted suggestions, opens new tab of a breakup of the AI hardware giant. Such a drastic move is unlikely to help much. For Lee, ⁠keeping his chip division's workers on board ought to be his top priority. His firm has fallen behind the nimbler SK Hynix in the race to develop next-generation data storage chips vital to AI. But Samsung is starting to catch up: the company recently confirmed it started mass production for the latest high-bandwidth memory for Nvidia's (NVDA.O), opens new tab flagship processor. The semiconductor division is now on track to account for over 90% of the group's total operating profit until 2031. For ⁠now, Samsung's fortunes depend on keeping its AI and chip talent happy. Follow Robyn Mak on X, opens new tab. Context News* Samsung Electronics said on May 13 that it regretted the collapse of pay deal talks with its South Korean union and said it would continue "sincere dialogue". The union leader said on the same day that it failed to ⁠reach a pay deal with the company, warning that more than 50,000 workers could go ahead with a full strike for 18 days from May 21. * Samsung's workers are demanding bonus caps to be eliminated, a 7% hike in base salaries, that 15% of annual operating profit be ⁠allocated as bonus pay and more clarity on how bonus pay is calculated. * Rival SK Hynix in September accepted its union's demand to allocate 10% of the company's annual operating profit to a bonus pool for 10 years. It also abolished a cap that limited bonuses to 1,000% of an employee's base salary. Editing by Una Galani; Production by Aditya Srivastav * Suggested Topics: * Breakingviews * Worker Rights Breakingviews Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time. Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on X @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors. Robyn Mak Thomson Reuters Robyn Mak joined Reuters Breakingviews in 2013. Previously, she was a Research Associate for the Global Policy Programs at the Asia Society in New York. She has also worked at the Carnegie Endowment for International Peace in Washington DC and interned at several consulting firms, including the Albright Stonebridge Group. She holds a masters degree in international economics and international relations from the Johns Hopkins School of Advanced International Studies and is a magna cum laude graduate of New York University.

Samsung workers demand bigger slice of surging AI profits

Samsung Electronics is locked in a feud with its workers over how to share the spoils of the AI-driven semiconductor boom, with unions threatening to call a strike if the chipmaker does not increase wages and bonuses. Two Samsung unions are demanding the company pay out 15 per cent of each division's operating profits to workers, as well as raise wages by 7 per cent. They have threatened an 18-day walkout starting on May 21 if these demands are not met. The dispute comes at a time of surging demand for semiconductors, especially the advanced high-bandwidth memory chips, made by Samsung and others, that AI companies need to run their data centres. On Wednesday Samsung Electronics' stock market value hit more than $1tn after its shares surged more than 14 per cent to an all-time high. Net profit soared to a record Won47.2tn ($32.6bn) in the first quarter, almost six times higher than the figure in the same period a year ago. Almost all of the profits were earned by the semiconductor division. Samsung Electronics staff are now demanding a share. Last month, 40,000 workers rallied outside Samsung's factory complex in Pyeongtaek, 70km south of Seoul. A strike could disrupt global supply chains at a time when memory chip supply is tight. A rush by AI companies to sign long-term contracts with chipmakers has pushed up prices for other customers, including makers of consumer electronics. Kwon Seok-joon, a professor at Sungkyunkwan University in Seoul, estimated an 18-day walkout would cost Samsung between Won10tn and Won17tn in direct losses, but "the bigger damage is indirect". Samsung is trying to build up a contract chipmaking business and to establish itself as a trusted supplier of HBM4 chips to Nvidia. There would also be ripple effects on the 1,700 smaller companies that supply Samsung. The Bank of Korea estimates about half of the country's first-quarter GDP growth of 1.7 per cent was attributable to chipmaking. Samsung Electronics and its rival SK Hynix account for more than 40 per cent of the value of the Kospi index. Management and unions are close to agreement on the amount of bonuses to be paid. A person familiar with the situation said Samsung had offered to allocate about 13 per cent of operating profit. The main sticking point is whether the bonuses are enshrined in company rules and paid out every year. Woo Ha-kyung, acting chair of the National Samsung Electronics Union, said negotiations had broken down because management had only made a one-off offer rather than including bonuses in contracts as the unions wanted. Samsung said it would "continue to make efforts to reach an agreement with the union". Samsung Electronics' situation contrasts with that of SK Hynix, the other major South Korean chipmaking beneficiary of the AI boom, which has agreed to set aside 10 per cent of operating profit for workers for the next decade. For SK Hynix's workers, the rewards are potentially lucrative. Broker Meritz Securities forecasts SK Hynix will make Won250tn in operating profit this year. A tenth of this sum distributed among 35,000 employees would mean an average payout of about Won700mn (about $475,000) each. A mid-level Samsung worker "might make Won90mn per year and get Won45mn in bonuses but, at Hynix, you'd get a bonus of Won250mn or Won300m", said Park Jun-young, a former Samsung semiconductor worker who now writes about the industry. "It's a huge difference." One Samsung worker who plans to join the strike said that they hoped "the treatment of graduates from the nation's top engineering universities would improve, and that the company would proactively uphold its value of 'talent first'. However, based on what I have observed since joining the company, I believe it is time to take action." The worker did not want their name to be published. Another thorny issue is Samsung's corporate structure. Unlike Hynix, which is purely a chipmaker, Samsung also makes appliances, televisions and smartphones -- businesses that are increasingly struggling because of the sky-high chip prices that are enriching the semiconductor division. The firm has a "One Samsung" philosophy that divisions should co-operate rather than compete with each other, but this approach would be undermined if workers from the semiconductor division -- which is earning the lion's share of group profits -- received higher, formula-based rewards. One smaller union whose members are mostly in the division making smartphones, TVs and home appliances pulled out of the joint strike action on Monday. If the semiconductor division "gets 15 per cent of operating profit, the maths gets uncomfortable fast", Kwon said, in a reference to the disparities that would be created. In the long run, Kwon said he expected either a "spin-off in some form" or the semiconductor division becoming a "quasi-autonomous 'company within a company'" with its own pay incentives. Additional reporting by Song Jung-a

Imminent Samsung Strike Could Be an Earthquake for AI

Samsung and a South Korean labor union left the table without a deal on Tuesday. With these negotiations part of a last-ditch effort to salvage relations ahead of a planned May 21 strike that would last two weeks, ripples across the AI biz globally are increasingly likely. The AI hardware world is no doubt holding its breath for what happens next since Samsung’s three manufacturing sites in South Korea, at Giheung, Hwaseong, and Pyeongtaek, all make components for cloud and high performance computing, including crucial AI memory manufacturingâ€"which is at the heart of the labor dispute. Samsung and its bitter local rival SK Hynix are two of only three companies in the world that make it. According to Reuters, union representative Choi Seung-ho said he regretted that “none of the agenda items requested by the union have been addressed.†At issue is a union demand that a cap on bonus pay be abolished. SK Hynix took the same action in 2025 and, per Reuters, employee bonuses at that company skyrocketed to three times what Samsung workers can receive. Widespread union activity at Samsung reportedly soon followed. How bad would a strike be for the AI business? Well, in April there was a one-day strike at Samsung led by this union, and production dropped right off. The output from its chip foundry reportedly plunged 58.1%, while its memory fabrication plants reportedly sank by 18% during the relevant shift. One estimate from the union placed potential company losses from the full strike at an astonishing 30 trillion wonâ€"which would be about $20 billion. That’s a big number from what is admittedly far from a neutral source, but big numbers are merited here. After all, Samsung’s recent revenue spike from AI components has been mind-boggling. In quarter one of 2026, Samsung reported an almost 50-fold year-over-year rise in income from chips. Samsung just crossed the $1 trillion valuation mark this month, and it is now the 11th largest company in the world by market cap. At the same time, SK Hynix actually exceeded it in terms of overall profits last year. SK Hynix invested heavily in AI-friendly high-bandwidth memory (HBM) technology in 2024, getting the jump on Samsung, and establishing itself as a crucial part of the AI memory supply chain. Even combined, the two companies can’t manufacture HBM fast enough to meet current demand. Reuters notes that Shin Je-yoon, Samsung's chairman of â the board, said he was "worried about losing market leadership amid fleeing customers and falling competitiveness" in the event of a strike.