Samsung averts strike with $26.6 billion in AI boom bonuses, but deep divisions remain

Samsung reportedly set to distribute up to $26.6 billion to staff in AI-driven semiconductor bonuses after last-minute union deal -- average payouts could approach $400,000 per chip employee

Following a last-minute deal yesterday between Samsung Electronics and its South Korean workers' union, the company will reportedly distribute 40 trillion won ($26.6 million) in bonuses to chip employees. According to a Bloomberg report, the bonus, which will vary by employee, will result in an average payout of 513 million won (~$339,000) per employee in Samsung's semiconductor division, based on proposed terms and projected 2026 operating profits. Other estimates put the figure at around 600 million won (~$396,000). As part of the tentative deal -- which narrowly averted a strike originally scheduled to begin May 21st -- Samsung has reportedly agreed to distribute 10.5% of its profits as employee bonuses in the form of stock, plus another 1.5% in cash. The union initially requested 15%. Addressing another major union demand, the new bonus program will continue for 10 years -- rather than a one-off payment -- provided specified profit targets are met. The union plans to vote on the deal internally over the coming week. Should the deal pass, employees will likely receive the bonuses in early 2027. The agreement permits employees to sell one-third of the shares right away, and the remainder in installments over two years, according to Bloomberg. The deal comes after months of escalating labor unrest centered on employee bonuses. Labor unions demanded a revision of Samsung's bonus structure that would allow employees to earn more, as the company's profits surge amid the AI-driven semiconductor boom. Bloomberg estimates Samsung's 2026 operating profits will multiply sevenfold to 330 trillion won (~$218 billion). The unprecedented profits are projected as the AI infrastructure boom has transformed memory chips -- once a cyclical commodity business -- into one of the most lucrative industries on earth. Demand for High Bandwidth Memory (HBM) and other AI-oriented components has triggered what analysts are calling a semiconductor supercycle. The workers at the center of this boom argue that since they are active facilitators of the hardware, they deserve a share of the profits. Samsung is notably not the first major Korean chipmaker to reach this conclusion. Last September, SK Hynix settled with its own union to allocate 10% of annual operating profit directly to employees as performance bonuses for the next decade, while removing caps on bonuses. The payouts themselves are extraordinary by almost any conventional corporate standard -- but then again, so are the profits currently flowing through the AI semiconductor ecosystem. Reports suggest the payouts are having a broader impact on the industry. Jobs at Samsung and SK Hynix were already coveted in South Korea. However, with potential bonuses that can exceed the lifetime earnings of workers in other sectors, competition for roles is sky-high. The bonuses are also reshaping decision-making within the companies themselves. We recently covered reports that Samsung and SK Hynix employees were considering terminating prestigious overseas training opportunities to remain eligible for bonuses. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

Samsung Elec's South Korean labour union to vote on tentative pay plan -union

SEOUL, May 20 (Reuters) - Samsung Electronics (005930.KS), opens new tab and its South Korean labour union reached a preliminary pay deal on Wednesday, potentially averting a planned lengthy strike that ⁠threatened to disrupt the production of AI and other chips. The labour union said it had decided to suspend a general strike and ⁠put the tentative agreement to a vote by union members. The vote ⁠will take place from May 23 to May 28, ⁠according to the union's website. Reporting by ⁠Hyunjoo Jin, Joyce Lee and Heekyong Yang; Editing by Alex Richardson Our Standards: The Thomson Reuters Trust Principles., opens new tab

Samsung Averts a Walkout With Big Bonuses, but Discord Over A.I. Profits Brews

Samsung Electronics, a global memory chip supplier, has been a major beneficiary of the A.I boom. It has also become the center of a debate over how to divide its spoils. For months, workers at the semiconductor division of Samsung Electronics felt left behind in the global artificial intelligence boom. The A.I. build out was in full swing, driving up demand for computer memory chips, an industry dominated by Samsung and another South Korean company, SK Hynix. Reflecting this new age of plenty, SK Hynix had in 2025 unveiled new, industry-leading perks: 10 percent of operating profit was set aside for worker bonuses. Caps for those bonuses were also removed. In recent days, Samsung's largest labor union made a similar request in its negotiations -- that the company commit 15 percent of its operating profit for performance bonuses for the semiconductor division, and to remove a cap that limits individual bonuses. Disagreements with the company brought the workers to the brink of a strike, which was averted Wednesday night after an intervention by government mediators. Under the provisional agreement, which abolished the bonus cap, Samsung is expected to set aside 10.5 percent of profits for bonuses. In the first three months of this year, the company's profit soared to $39 billion. The union will vote on whether to finalize the deal by next Wednesday. While the deal defused the immediate crisis, the episode illustrated a question taking on increasing urgency amid South Korea's A.I. windfall: How should its profits be distributed?

Samsung chip workers offered a $340,000 average bonus as union pushes toward $1m and an 18-day strike

Leaked transcripts show memory-line staff offered up to 607% bonuses worth $477,000, while logic-chip employees get as little as 50%. The 45,000-person walkout, if it lands, would be the largest in semiconductor-industry history. Samsung Electronics will pay its chip workers an average bonus of about $340,000 for the year, Bloomberg reported on Thursday, as the company tries to share out the windfall from a record AI-memory cycle and head off industrial action that could halt high-bandwidth memory production at peak demand. The offer has not, on the available reporting, satisfied the union. The 45,000-strong National Samsung Electronics Union is preparing for an 18-day walkout that would be the largest in semiconductor-industry history. The bonus structure is the part the leaked negotiating materials get sharpest about. Internal Samsung meeting transcripts show memory-division staff offered 607% bonuses worth roughly $477,000, while logic-chip employees on the foundry side have been told to expect as little as 50%. The disparity reflects the underlying business: Samsung's HBM3E and HBM4 lines are running flat-out into Nvidia, AMD and hyperscaler customer demand, while the foundry book has continued to lag TSMC and remains margin-pressured. Union representatives have called the gap a 'retention crisis the company cannot afford', on the same transcripts. The $340,000 average figure Bloomberg has carried is the blended-bonus number across the chip division. The worker position: the bonus is not enough. The union is pushing for compensation closer to $1m per employee, calibrated against SK Hynix's payouts of $900,000-$1m under that company's profit-sharing structure. The structural complaint is that Samsung's bonus is a one-time payout rather than a recurring profit-share, which exposes workers to the next downcycle while leaving the AI-cycle upside concentrated at the shareholder level. The strike threat is unusually large. The 45,000-worker headcount inside the union represents the bulk of Samsung's Korean memory-and-logic operations. An 18-day stoppage at the HBM lines would land directly on the production runway Nvidia, AMD and the major hyperscalers have been pricing into their second-half capex commitments. Fortune's estimate has the stoppage potentially costing $20bn in lost output and downstream-customer exposure. Samsung's government-mediated talks have resumed inside the ten days before the walkout window, has the latest summit positioned as the final attempt to avert industrial action. The wider Samsung-union backdrop is the part this story sits inside. Samsung's $1tn milestone and its dynasty-wealth governance structure have produced an unusually visible public-relations problem for the company across the past quarter, with the union arguing in open court and in the financial press that the AI-cycle windfall is being structurally diverted from the workers building the product. The bonus dispute is the operational expression of that argument. The labour-market context is sharper still. Standard Chartered's 7,000-job cut announcement earlier this week and the wider AI-driven workforce restructuring cycle have produced an environment in which highly compensated semiconductor workers are pushing simultaneously for AI-cycle profit-shares and for protection against the downcycle that AI itself is now generating in other categories. The Gen Z commencement-day backlash against pro-AI keynote speakers is the generational expression of the same trade. The Samsung union dispute is the most expensive single labour-action proxy on that trade currently visible. Samsung has not publicly disclosed the precise distribution of the $340,000 average, the per-line breakdown the union has been negotiating against, or the contingency production plan if the 18-day walkout lands as scheduled. The next visible proof point will be the outcome of the government-mediated final talks, expected to conclude before the strike window opens. The company's Q2 earnings call, scheduled for late July, will be the first public read on how the AI-memory cycle has translated into Samsung's actual reported results and on whether the bonus structure holds against next-cycle negotiations.

Exclusive: At Samsung, the global AI boom spurred a looming strike and deep divisions

SEOUL, May 15 (Reuters) - A looming 18-day strike at South Korean chip giant Samsung that has triggered worries within the government, rattled foreign investors and threatened global supply chains rests on one crucial question: who should share in the spoils of the AI boom? More than 45,000 workers are threatening to stage the largest strike in the conglomerate's history from May 21, reducing production of memory chips that are crucial components in AI data centres, smartphones and laptops, as Samsung and its union struggle to find a compromise over bonus payouts. Samsung Electronics (005930.KS), opens new tab, which has reaped huge profits from a global memory shortage, has offered to pay generous bonuses to staff. But it wants to give 27,000 memory chip employees at least six times more than its other workers in its logic chip design and manufacturing businesses. Its union argues that the firm's other 23,000 workers - responsible for making AI chips for Tesla's (TSLA.O), opens new tab and Nvidia's (NVDA.O), opens new tab - who often work in the same buildings as their memory colleagues should not be left behind, despite suffering billions in losses in recent years as the foundry business floundered. Reuters reviewed hundreds of pages of transcripts covering Samsung internal wage negotiations and spoke with more than 10 workers, including union leaders, and sources familiar with the discussions. They spoke of deep divisions, described employee departures and revealed how this could be traced to - and threaten - Samsung's unusual goal to become the world's only semiconductor company offering a "one-stop" shop that spans different types of chips and services, unlike more specialized competitors like Micron (MU.O), opens new tab or TSMC (2330.TW), opens new tab. The internal discussions showing friction between the company divisions and employee departures have not been previously reported. JPMorgan estimated the strike could impact Samsung's operating profit by 21 trillion won to 31 trillion ⁠won ($14.08 billion to $20.79 billion), while sales losses could stand at about 4.5 trillion won. Samsung's Device Solutions Division includes three main businesses - memory, system LSI, and foundry - and the AI boom has made these divisions wildly unequal in profitability. Samsung is the world's top memory chipmaker by sales but also makes televisions and smartphones. The issues are "partly self-inflicted by the company," Namuh Rhee, a Yonsei University professor and chairman of a Korean corporate governance group, said on social media. He said Samsung's move to put different businesses together created a complex business structure that results in a valuation discount while causing conflicts of interest and limiting business opportunities. "Samsung must enable foundries to become self-reliant." TALENT DRAIN THREAT Discontent among Samsung workers grew last year after rival SK Hynix (000660.KS), opens new tab abolished its pay cap for 10 years. This resulted in bonuses more than three times higher than those offered to Samsung workers, which later lured some people to jump ship. In March, Samsung proposed that memory chip workers receive bonuses that would top those of SK Hynix employees, or 607% of their annual salary, according to transcripts of its wage negotiations. The company's memory and logic chip businesses used to receive the same bonus plan. But employees in its other businesses who work primarily on logic chips, such as "base die" which are crucial components of AI chips, would receive bonuses of 50% to 100%, according to the documents. Union officials argued that the big gap in bonuses would push logic chip employees to leave for the memory unit or for other companies, crippling it after Samsung Chairman Jay Y. Lee said he wants to be the "clear No. 1" in the logic chip market by 2030. "If the memory division gets 500 million won while the foundry division only gets 80 million won, what motivation would those employees have to keep working?" said union leader Choi ⁠Seung-ho during negotiations, according to the transcripts. Some workers said an exodus was already underway. A worker who identified himself by his surname, Lee, a foundry engineer in Pyeongtaek, said his team has shrunk sharply in the past couple of years as some of them moved to Samsung's memory division and SK Hynix. Two other employees who declined to be named said many of their colleagues are currently applying for jobs with SK Hynix and other companies. SK Hynix did not provide an immediate comment. The union's demands include requests for Samsung to abolish a bonus cap of 50% of annual salaries and allocate 15% of annual operating profit to a bonus pool distributed to workers. Samsung negotiators say performance bonuses should be paid out according to merit. "They, the logic chip business, posted losses in the trillions of won and honestly, if it had not been for our company, they probably would have gone out of business or closed down," said Samsung executive and negotiator Kim Hyung-ro, according to the transcripts. "So ⁠how can you justify giving performance bonuses?" "The company still has faith in this business and continues to invest consistently in facilities - and in reality, those investments are being funded with money earned from the memory business." In a statement, Samsung said "the logic chip business is a strategically significant business which we have continuously invested in, guided by our long-term vision." "Samsung Electronics will offer its employees the best compensation in the industry" with the latest proposal, it said. Samsung also said that should the strike go ahead, a failure to deliver to customers would result in "a complete loss of trust." RIPPLE EFFECT Samsung's top leadership, the South Korean government and investors have voiced concerns about how ⁠the potential strike could threaten Samsung and affect the broader economy. In an internal memo earlier this month, Samsung's chairman said apart from business disruptions, a strike could trigger capital outflows, a drop in tax revenue and a weakening of the won. In late April, South Korean President Lee Jae Myung said some unions were making excessive demands, in remarks that were widely perceived as aimed at Samsung's unions. The American Chamber of Commerce in Korea said the labour uncertainty could affect confidence in Korea's reputation as a dependable partner in global manufacturing and supply chains. Analysts said other companies were watching the dispute as a ⁠potential barometer for labor-management relations. "If Samsung sets a precedent in which union demands are pushed through by means of a strike, companies could find themselves in a very unfavorable bargaining position in the future," Korea University law professor Park Ji-soon said. Reuters spoke to protesting workers who said Samsung did not recognise its employees' contributions to making it a world-leading company. Lee, a chip researcher for 30 years, told Reuters on the sidelines of a rally of about 40,000 workers in late April that many of his colleagues had left for other companies and that he had applied to work at Micron. "I attended the rally because I am infuriated," he said. "I can't just sit in the office and work." "I no longer have pride in Samsung." Reporting by Hyunjoo Jin; Additional reporting by Heekyong Yang; Editing by Brenda Goh and Thomas Derpinghaus Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * World at Work * Worker Rights * ADAS, AV & Safety * Supply Chain * Sustainable & EV Supply Chain

A 45,000-person labor strike at Samsung's memory chip plants could throw a wrench into the AI boom | Fortune

Samsung makes about a third of the world's DRAM -- the memory inside virtually every phone, laptop, server, and data center on the planet. Together with its Korean rival SK Hynix, it controls roughly two-thirds of the global DRAM market and an even larger share of high-bandwidth memory (HBM), the specialized chips that AI systems cannot run without. Samsung and SK Hynix are two of only three companies that make HBM at all; the third being American semiconductor company Micron. When people talk about AI infrastructure, they tend to focus on Nvidia's GPUs. But those GPUs are useless without the memory chips stacked alongside them, and Samsung's three fabrication complexes in South Korea are among the most important pieces of the AI industrial boom. Samsung operates 12 fabrication lines, employs over 260,000 people worldwide, and is investing $73 billion in semiconductor capex and R&D this year alone, the largest single-year chip investment by any company in history. That's why it'll be a shock to the system when on May 21, nearly 45,000 of Samsung's unionized workers plan to walk off the job for 18 days. If that happens, it will be the largest work stoppage in the history of the semiconductor industry, at the single most important chokepoint in the AI supply chain. But unlike past labor disputes, AI hyperscalers won't be able to absorb a supply disruption. Last September, SK Hynix settled with its own union to allocate 10% of annual operating profit directly to employees as performance bonuses for the next decade, while removing caps on bonuses. Based on 2026 profit forecasts, that translates to average payouts of $460,000-$477,000 per worker this year across SK Hynix's 35,000 staff, with projections approaching $900,000 per person next year. This is nothing new for SK Hynix: it already paid profit-sharing bonuses averaging about $95,000 per employee this past February. Now, Samsung's unions are requesting 15% of operating profit be allocated to a bonus pool, removal of the current cap that limits bonuses to 50% of base salary, and a 7% wage hike. Management countered with roughly 13% of operating profit, but only as a one-time payment for 2026, and didn't commit to permanent structural changes. The competitive pressure has already become an issue for Samsung's talent. Union chairman Choi Seung-ho said roughly 200 Samsung employees have left for SK Hynix over the past four months. In 2024, Samsung paid no performance bonuses at all after the chip unit posted operating losses throughout the memory downturn. And while the turnaround has been staggering, with Q1 2026 operating profit increasing nearly eightfold to a record, the workers received none of the payout. After a 17-hour negotiation session at the National Labor Relations Commission on May 13 failed to produce a deal, the NLRC struggled to find a compromise. The commission initially proposed roughly 40 trillion won ($26.7 billion) in total bonus payouts, which the union rejected. Samsung then sent a letter proposing further direct dialogue, and the union accepted only if co-CEO Jun Young-hyun personally presents concrete proposals on key issues. No deal has been reached yet. In April, a one-day labor walkout forecasted what an extended strike could do. Foundry output reportedly dropped 58% and memory fabrication fell 18% during that affected shift. Samsung believes a full shutdown could occur for the strike's planned 18-day span with nearly 45,000 union members expected to participate. Should such a thing happen, industry estimates put potential losses at 30 trillion-100 trillion won. Samsung has begun "warm-down" procedures, scaling back wafer inputs, as halting chip fabrication mid-process means scrapping wafers that cost $20,000 each. A strike would slow down Samsung while it plays catch-up with its rival. For the first time in 33 years, SK Hynix overtook Samsung as the world's largest DRAM maker in Q1 last year, driven almost entirely by its dominance in HBM for AI. The next quarter, SK Hynix held 62% of the global HBM market as Samsung slipped to 17%, behind even Micron at 21%. Samsung's HBM3E chips struggled to pass Nvidia's qualification standards for much of 2025, while SK Hynix and Micron captured the premium global contracts. By the end of 2025, Samsung reclaimed the overall DRAM market share lead after shipping HBM to Nvidia and expanding legacy memory production. Its HBM4 chips, which began mass production in February, have reportedly outperformed early expectations, and the entire 2026 HBM4 production run is already sold out. But a prolonged strike could put that turnaround trajectory at risk. Samsung Chairman Shin Je-yoon said he was "worried about losing market leadership amid fleeing customers and falling competitiveness" in the event of a strike. JPMorgan analyst Jay Kwon has estimated that if Samsung meets the union's demands in full, 2026 operating profit faces a 7%-12% downside from increased labor costs alone. Add more than 4 trillion won in lost revenue from 18 days of reduced production, and the total operating profit impact lands at roughly 2.1 trillion-3.5 trillion won in JPMorgan's base case, with considerably worse outcomes if the strike expands or recovery is slow. The memory market has become tight, and the best illustration was none other than Samsung's negotiations with Apple earlier this year. According to Korean outlet Dealsite, Apple held emergency meetings with Samsung's semiconductor division to lock down memory for iPhone 17 production. Samsung reportedly planned to push for a 60% price increase. Instead, as a negotiating tactic, it opened with a demand for 100%, a full doubling, and Apple accepted immediately. On May 12, presidential policy chief Kim Yong-beom posted on Facebook that South Korea should pay its citizens a "dividend" from the AI boom, arguing that the gains were built on an industrial foundation the entire nation accumulated over half a century. He explicitly compared it to Alaska's Permanent Fund, where oil revenues are distributed to residents. That day, the Korea Composite Stock Price Index (KOSPI) fell as much as 5.1% intraday, shedding more than $300 billion in value as investors initially interpreted it as a tax regime aimed at Samsung and SK Hynix -- which together account for nearly half the index's total market cap. Kim quickly clarified that he was talking about redistributing excess tax revenue already generated by the boom, not imposing new levies. The presidential office confirmed the remarks were Kim's personal opinion, not government policy. Foreign funds dumped 5.6 trillion won in KOSPI shares on the day of Kim's citizen dividend comments. But Korean retail investors flooded in, buying 6.7 trillion won. The KOSPI, which had briefly touched 7,400, reversed course and closed at a record high above 7,800 by the next day. Samsung and SK Hynix together are projected to post around 500 trillion won in combined operating profit in 2026, and their corporate tax bill alone could exceed 100 trillion won.

Union calls strike at South Korea chip giant Samsung Electronics

Seoul (AFP) - A planned strike at South Korean chip giant Samsung Electronics will go ahead from Thursday, its union said, after talks on bonus payouts collapsed, raising concerns over a disruption to the country's key semiconductor industry. The walkout, set to begin Thursday, is expected to dwarf a 2024 strike that drew about 6,000 workers at the world's top memory chipmaker. The dispute centres on profit-sharing at a key player in the global semiconductor supply chain, with its chips widely used in artificial intelligence systems and consumer electronics. The tech giant's shares have surged nearly 400 percent over the past year on the back of an AI boom, and saw its market capitalisation top $1 trillion for the first time in May. The union had called for the scrapping of a bonus cap set at 50 percent of annual salaries and for 15 percent of operating profit to be allocated to bonuses. "Around 10:00 pm on May 19, the labor union agreed to the mediation proposal put forward by the National Labor Relations Commission; however, management expressed its refusal," it said in a statement on Wednesday. "The labour union will lawfully commence a general strike tomorrow as scheduled." According to the union's lawyer, around 50,500 workers are set to walk off production lines for 18 days from Thursday following the breakdown of negotiations with management. Samsung's management said the talks failed because "acceding to the labour union's excessive demands would risk undermining the fundamental principles of the company's management". "Under no circumstances should a strike take place," it said. Concerns are growing within the South Korean government that a prolonged union strike could hurt the export-driven economy, with chips making up about 35 percent of exports. South Korea's presidential office voiced "deep regret" over the collapse of the talks, urging both sides to keep working toward an agreement given the strike's "potential repercussions for the Korean economy". Some experts say even a partial halt in Samsung's operations could prove damaging -- though the union argues that production stoppages have already occurred in the past for reasons related to maintenance and equipment inspections. The government could invoke emergency mediation powers -- a measure that could halt strikes or other industrial action and trigger mediation if they are deemed a threat to the national economy. Limited impact? But Tom Hsu, an analyst at Taipei-based research firm TrendForce, said the strike's potential impact may be limited. "Due to the high level of automation in front-end facilities, TrendForce expects Samsung's DRAM and NAND Flash production to remain at full capacity," he told AFP. "Any potential impact from the strike is likely to be confined to non-memory business segments." A Suwon court this week granted Samsung Electronics an injunction requiring staffing and operations to be maintained at normal levels during any walkout. Kim Sung-hee, director of Workers' Institute for the Industrial and Labour Policy, said that while the strike could cause losses, "they are unlikely to be irreversible". The strike does not mean it would "automatically trigger an economic crisis," he told AFP. AI boom Samsung is a major producer of chips used in everything from artificial intelligence to consumer electronics, raising the prospect that the planned strike could cause severe disruption and losses. The company said this year it had begun mass production of next-generation high-bandwidth memory chips, HBM4, seen as a key component for scaling up the vast data centres needed for AI development. The dispute unfolds against the backdrop of an AI boom that is benefiting South Korean tech groups, boosting national growth and the stock market. Both Samsung and its domestic rival SK hynix posted record profits in the first quarter, driven by global demand for AI chips. Long staunchly anti-union, late founder Lee Byung-chul once vowed never to allow unions "until I have dirt over my eyes". Samsung Electronics' first labour union was formed in the late 2010s.

Samsung strike talks enter final hours as global chip supply chains at risk

All eyes are on South Korea today as officials bid to avert a strike by more than 45,000 Samsung workers that could impact global semiconductor supply chains. With a planned walkout set to begin on 21 May, Samsung Electronics and its workers' unions held what the government described as a final round of talks today (18 May), following the collapse last week of a first round of government-mediated negotiations, according to Reuters. The threatened 18-day strike comes amid an already severe global shortage in memory chips, essential components in AI data centres, smartphones and laptops that has fuelled massive profits at Samsung and its peers in recent months. The dispute centres on Samsung's performance-based bonus system. According to CNBC, the union is seeking bonuses equivalent to 15pc of Samsung's operating profit, while Samsung's management has countered with an offer of 10pc of operating profit. The economic stakes could hardly be higher. CNBC quotes Prime Minister Kim Min-seok who estimates direct strike losses at 1trn won ($664.7m), potentially rising to 100trn won if chip production disruptions force Samsung to scrap wafers already in production. The company accounts for 22.8pc of South Korea's exports and revenue equivalent to 12.5pc of GDP, according to CNBC. Kim described Monday's talks as the last opportunity to avert the strike, warning that "the economic losses we will face will be beyond imagination". Pressure on the unions mounted further today (May 18) when the Suwon District Court partially granted Samsung's injunction request against two unions, ordering that staffing levels required for safety, facility protection and product quality must remain at normal levels during any industrial action. The Financial Times cited corporate lawyer Hyeseop Sim who says the ruling "will significantly weaken the scope of the strike and the negotiating power of the unions", adding that chip production was therefore unlikely to be significantly disrupted. Samsung chip division executives have also warned that key customers including Nvidia indicated they might temporarily halt shipments during a strike over product quality concerns, according to Reuters. President Lee Jae-myung called for balance on Monday, posting on X that "labour must be respected as much as corporations, and corporate management rights must be respected as much as labour rights". "Workers must be able to receive fair compensation for the labour they provide, and shareholders who have invested while bearing risks and losses have a share in corporate profits," he continued. Samsung chairman Lee Jae-yong issued a rare public apology to customers worldwide on Saturday for causing "worry and anxiety", according to local Korean media. All eyes will be on the talks that are reportedly due to finish tomorrow, as the industry fears yet another hit to the global chip supply chain. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

[ED] Tentative deal struck at Samsung - The Korea Times

Samsung Electronics Labor Union leader Choi Seung-ho, left, and Yeo Myung-koo, vice president of the People Team at Samsung Electronics' Device Solutions division, are seen arriving for mediated talks at the National Labor Relations Commission in Sejong, Wednesday. The talks fell through. Yonhap Talking intensely until the 11th hour, Samsung Electronics' management and its unionized workers struck a tentative deal that put on hold a planned Thursday strike. Union members will now vote to finalize the deal. Tentative and on-hold may be the terms for the moment, but an imminent strike averted will reinject stability for the national economy and in the global supply chain of chips highly in demand for the artificial intelligence (AI) industry. Management and labor at the nation's tech giant each made some concessions regarding the bonus payments. Labor Minister Kim Young-hoon who mediated the final talks said that the two sides found common ground on the matter of distributing profits. A strike at Samsung Electronics would have hit the national economy and the global supply chain. Samsung accounts for about 14 percent of the nation's GDP and about a quarter of its exports. The Bank of Korea warned that a potential industrial action could shave off 0.5 percentage points from its forecast of 2 percent growth this year, and Prime Minister Kim Min-seok said it would be "fatal" to the national economy. Samsung is the world's largest memory chip manufacturer, with clients around the globe. While the averted strike allows a national exhaling in many aspects, the issue of heightened demand for bonus payments is likely to expand. Samsung Biologics saw a five-day strike in early May. HD Hyundai Heavy Industries and Kakao workers are also asking for higher bonus payments, with the latter moving toward a walkout. Another likely spillover effect from the Samsung labor dispute is discussion about how Korea's core industries will balance prosperity with responsibility, labor rights with economic sustainability and short-term demands with long-term national interest, as we wrote previously. The bonuses that Samsung employees hope to receive go as high as hundreds of millions of won, up to a decade's worth of annual salary for the average Korean worker. To some extent, the call for equal distribution for employees in the semiconductor division reflects Korea's rigid labor market. The semiconductor industry is a pivotal growth engine for Korea. Developments in AI have led to record-high first-quarter earnings this year for Samsung and SK hynix. Chips are also an industry requiring massive investments in research and development in order to maintain a leading technological edge. As the company and its workers continue to seek a fair resolution, they should discuss how to set up a model that ensures labor rights and economic sustainability. There are also concerns being raised about the "yellow envelope law," under which tens of thousands of employees at subcontracted companies can make labor-related requests from primary contractors -- in this case, Samsung Electronics. Labor strife over bonus payments encapsulates manifold issues in the labor market, including payment and distribution, that an economy and society pursuing AI-driven economic and technological shifts must debate and consider. Korea should tackle these issues from a rational perspective and open minds. President Lee Jae Myung stressed a few days ago that "labor should be respected as much as business and management rights should be respected just as labor rights are." The tide is high for a deal.

What are Samsung union workers demanding and how might strike play out? - The Korea Times

SEOUL -- Korean memory chip maker Samsung Electronics is facing its worst-ever strike, with nearly 48,000 workers threatening to walk off production lines on Thursday for 18 days over a dispute about bonus payouts. Samsung's union has asked the company to abolish a cap that limits bonuses to 50 percent of annual salaries and to allocate 15 percent of annual operating profit to a bonus pool that would be distributed to workers. It also wants Samsung to make the changes binding beyond this year. Samsung made a very different offer. Transcripts of negotiations between the union and Samsung showed that in March, Samsung cited estimates that some staff at smaller rival SK hynix could receive bonuses equivalent to 607 percent of their annual salary and proposed that its memory chip workers would gain a bonus exceeding levels that SK hynix workers receive. Samsung also proposed bonuses of 50 percent to 100 percent for staff in its logic chip businesses. These bonuses, however, would be a one-off payment for this year. In principle, it does not want to abolish the cap on bonuses at 50 percent of annual salaries. What is driving this? Samsung and SK hynix have seen profits balloon to record highs thanks to a global shortage of memory chips amid the boom in artificial intelligence. The two companies account for the majority of global memory production. Last year, SK hynix abolished its cap on bonus pay for 10 years, media reports said. This resulted in bonuses more than three times higher than those offered to Samsung workers, prompting many to jump ship for SK hynix and sparking a surge in union membership, according to Samsung's union. How might the strike play out? The strike promises to be far larger and more damaging than the last walkout to affect Samsung in 2024, when about 6,000 workers took part. Samsung's union says that nearly 48,000 employees, the majority of them chip workers, have signed up to participate. That represents 38 percent of Samsung Electronics' domestic work force. A court on Monday partially granted Samsung's request for an injunction, ruling that essential staffing levels at some production facilities must be maintained during any industrial action. Samsung has notified the union that this will require 7,087 workers to report for work even if the strike goes ahead. The company's chip factories in Korea operate 24 hours a day across three shifts in locations such as Pyeongtaek and Hwaseong. Why is this strike causing such concern? The strike threatens to dent the supply of memory chips at a time of severe shortages. Samsung is the world's largest maker of DRAM chips, commanding 36 percent of the market as of the end of last year, according to research firm TrendForce. Memory chips, key components in laptops and smartphones, have become essential building blocks for AI data centres. KB Securities analyst Jeff Kim has estimated that an 18-day strike could disrupt global supplies of DRAM memory by 3 percent to 4 percent and NAND memory by 2 percent to 3 percent, which would likely fuel further price increases. Korean government officials have also warned about the impact of a strike as Samsung accounts for nearly a quarter of Korea's exports. An official at Korea's central bank has said that a strike could, in a worst-case scenario, shave 0.5 percentage points off a forecast 2.0 percent expansion in the Korean economy this year. This assumes that around 30 trillion won ($19.9 billion) of chip production could be lost and that there might be an additional "few weeks" of disruption to production, the person said.

Samsung, union hold final mediation as strike deadline nears - The Korea Times

Choi Seung-ho, left, head of Samsung Electronics' largest labor union, enters the National Labor Relations Commission office in Sejong, Tuesday. Yonhap Samsung Electronics and its largest labor union resumed government-led wage mediation Tuesday, entering the final day of talks in a last-ditch effort to avert a strike at the world's largest memory chipmaker. The two-day negotiations resumed days after the first round of mediation ended without a deal, as the two sides remained divided over performance-based bonuses ahead of an 18-day strike set to begin Thursday. Labor and management remain sharply split over performance-based bonuses tied to earnings from the tech giant's artificial intelligence (AI)-related semiconductor business, amid an ongoing global memory supercycle. The company has proposed maintaining the current excess profit incentive system while allowing the bonus pool to be calculated based on 10 percent of operating profit. It also proposed introducing a special compensation system, saying it would create a more flexible incentive structure. In contrast, the union is demanding fixed performance bonuses equal to 15 percent of the semiconductor division's operating profit, along with the removal of payout caps. The two sides also remain at odds over how performance bonuses should be distributed to other loss-making business units, industry sources said. The union has reportedly proposed allocating 70 percent of the semiconductor bonus pool to be shared across the entire division, with the remaining 30 percent distributed based on business unit performance. Management, however, reportedly argues the system would reward loss-making units and undermine performance-based incentives. It is instead pushing for a lower overall allocation rate to such payouts. Samsung Electronics' chip division posted a record operating profit of 53.7 trillion won ($35.8 billion) in the first quarter of this year. However, while the memory business is estimated to have been highly profitable, non-memory units likely posted losses. Industry observers say a walkout could cost the Korean economy up to 100 trillion won, given the country's heavy reliance on semiconductor exports.

Samsung's chip output cut feared to disrupt global supply chains - The Korea Times

Samsung Electronics' move to cut its chip output is fueling concerns over major disruptions to global customer deliveries, after the chipmaker failed to reach a wage agreement with its unions, industry officials said Friday. More than 43,000 unionized workers -- mostly from the firm's Device Solutions Division, which oversees the company's semiconductor business -- are set to begin an 18-day strike on Thursday following the latest deadlock in negotiations. They are demanding fixed performance bonuses equivalent to 15 percent of the operating profit generated by the company's semiconductor division, along with the removal of the payout cap. The output reduction is expected to strain the global semiconductor supply chain at a critical time when demand for memory chips -- particularly high-bandwidth memory -- far exceeds supply in the era of artificial intelligence (AI). Samsung is a major supplier of memory chips to global tech giants, such as Nvidia, Apple, AMD, Google and Meta. Semiconductor manufacturers typically reduce their production in response to weakening market demand, inventory adjustments or a downturn in the industry. However, Samsung's latest production adjustment is unusual in that it is a preemptive move to prepare for strike risks rather than market conditions. At a time when demand for AI chips is surging and memory supply is already tight, the world's largest memory chipmaker is reducing output due to the possibility of a strike. Analysts say this could be seen as a warning sign for the global semiconductor supply chain. "Even after the 18-day strike ends, it will likely take an additional two to three weeks to restart and normalize automated production lines," Kim Dong-won, a researcher at KB Securities, said in a recent report. Market watchers warn that such a prolonged production gap could trigger ripple effects across the global tech industry, potentially delaying shipments of AI servers, smartphones and data-center equipment that rely heavily on advanced memory chips. The disruption may also intensify price volatility and deepen procurement uncertainty for major customers rushing to secure supply. The American Chamber of Commerce in Korea (AMCHAM) also warned that Samsung's labor dispute could ripple through global chip supply chains. "There are mounting concerns that any significant production disruptions or operational uncertainty at Samsung Electronics could place additional strain on the global memory semiconductor market, potentially worsening supply bottlenecks, price volatility, procurement uncertainty, and broader supply chain instability," AMCHAM said on May 11. Industry officials said the biggest risk Samsung faces is that the company can be stigmatized as a chipmaker with an unpredictable labor risk from its major overseas clients, potentially tarnishing its global reputation. "The latest labor dispute may leave a negative image on Samsung -- particularly seen by its clients as a firm with an inherent labor risk," an industry official said. The official added that other chipmakers -- particularly Chinese companies -- may benefit from Samsung's labor dispute by stepping in to fill the gap left by Samsung. "Chances are SK hynix or other chipmakers particularly from China and the United States will absorb more demand due to the possible supply cut from Samsung," the official said. Industry Minister Kim Jung-kwan also emphasized on Thursday the importance of Samsung Electronics' semiconductor business, describing it as Korea's unrivaled growth engine and virtually its only key strategic asset. "The moment we lose competitiveness, it will not mean becoming second place -- survival itself will become difficult, and we will fall into a downward spiral. If a strike occurs under such circumstances, it will cause irrecoverable economic damage," Kim said in a post on X. In response to growing concerns, all Samsung Electronics executives, including Vice Chairman and CEO Jun Young-hyun and Roh Tae-moon, president in charge of the mobile business, issued a joint public apology over the ongoing labor-management conflict surrounding performance-based bonuses and expressed their willingness to resume talks. "We deeply bow our heads in apology while feeling a heavy sense of responsibility for failing to adequately meet the high expectations society places on Samsung," the executives said in the statement. The management also repeatedly urged the unions to resume dialogue, saying it considers them as "part of one family and a partner sharing a common destiny." "We will engage in talks with an open attitude and without preconditions."