After the second round of post-mortem mediation at Samsung Electronics finally broke down, the union announced that it would launch a general strike as scheduled. Samsung Chairman Shin Je-yoon warned that the strike may harm the interests of investors and employees and have serious consequences for the South Korean economy.
At around 3 a.m. local time on May 13, Samsung Electronics and its largest union, the National Samsung Electronics Union (NSEU), failed to reach an agreement in the second round of post-mortem mediation negotiations led by the South Korean government. The union immediately announced that if management fails to meet their demands, more than 50,000 employees will launch an 18-day general strike starting on May 21.
Affected by this news, Samsung Electronics plunged more than 6% in early trading in South Korea's KOSPI market today. As of press time, the decline narrowed to 0.2%, reported at 278,500 won.
The differences between labor and management are too great
Samsung Electronics’ labor and management have begun formal negotiations on the 2026 collective labor agreement in December last year. At that time, the global semiconductor market was in a super boom cycle driven by AI demand. Samsung recorded an operating profit of 57.2 trillion won in the first quarter, a year-on-year increase of 756%. The semiconductor business alone contributed 53.7 trillion won in profits, accounting for 93.9%.
However, the huge profits did not flow to the production line simultaneously.
What makes Samsung employees intolerable is the company's long-term cap on performance bonuses - bonuses must not exceed 50% of an individual's annual basic salary. As a direct competitor of Samsung in the high-bandwidth memory (HBM) field, SK Hynix abolished the bonus cap last year, and its employees received bonuses that were more than three times that of Samsung employees.
According to former Samsung employees, mid-level employees at Samsung earn an annual salary of about 90 million won, with bonuses capped at 45 million won; at SK Hynix, bonuses for similar positions can reach 250 million to 300 million won. It is this kind of open and transparent salary inversion that directly promotes the rapid expansion of Samsung's union membership, from about 10,000 last year to about 73,000 currently.
The rift between Samsung employees and the company continues to widen. Negotiations broke down for the first time in March this year. Since then, the union has obtained the right to strike in accordance with the law. Under the mediation of the Central Labor Committee, multiple rounds of coordination were conducted from April to early May this year, but failed to bridge the differences.
In the latest mediation negotiations, the Korean Labor Relations Commission (NLRC) assessed that the differences between the two parties were too large. The core demands of the union are clear and firm: 15% of the operating profits of each department should be used directly for employee performance bonuses, the 50% bonus cap should be completely abolished, and this distribution mechanism should be written into the collective labor agreement as a permanent clause.
However, Samsung only agreed to inject 10% of operating profits into the bonus pool, plus a one-time special compensation package. Management believed that this offer "exceeded industry standards" and the union's overall demands were "unsustainable in the long term." During this period, the Korea Labor Relations Commission proposed "various alternative plans" during the mediation process, but the union believed that these plans failed to reach the core, that is, the OPI system and the 50% bonus ceiling established by the upper management were still retained. In the end, the union requested that the mediation be suspended, and the negotiations broke down.
For companies, the financial hit would be extremely heavy if union conditions were fully accepted. Citigroup estimated in a research report that if performance bonuses are included in the cost of the next two years in accordance with the union's demands, Samsung Electronics' operating profits in 2026 and 2027 are expected to be reduced by 10% to 11%.
JPMorgan Chase gave a more precise calculation in a report released in May: In an extreme scenario, if the union's demands are fully met and semiconductor production is damaged, Samsung's operating profit in 2026 may face a downward risk of 7% to 12%, and additional labor costs may be as high as 21 trillion to 39 trillion won. At the same time, about 1% to 2% of the semiconductor department's revenue may be directly damaged due to the suspension of production.
Storage supply chain faces ultimate test
Samsung Chairman Shin Je-yoon warned that the strike may harm the interests of investors and employees and have serious consequences for the South Korean economy. He also said that if the strike disrupts production, the company could "lose its market leadership" as customers flee and become less competitive.
Just the day before the negotiations broke down, the American Chamber of Commerce in South Korea (AMCHAM), which has more than 800 member companies, issued a rare official statement on the labor dispute of a single company: "Samsung Electronics plays a key role in the global supply chain of storage semiconductors required for artificial intelligence infrastructure, cloud computing, advanced manufacturing, automobiles, and energy industries. Once Samsung experiences large-scale production shutdowns or operational uncertainty, the pressure on the global storage semiconductor market will further intensify, and concerns about supply chain bottlenecks, price fluctuations, procurement stability, and overall supply chain reliability will spread."
Samsung has an irreplaceable say in the global memory chip market - DRAM market share is about 42%, NAND flash memory market share is about 34%, and HBM market share is about 25%
Global technology giants such as Microsoft, Google, Apple, Amazon, Oracle, Nvidia, Dell, HP, and IBM rely heavily on Samsung's DRAM, NAND flash memory, and HBM products in core business areas such as data centers, smartphones, personal computers, and AI accelerators.
As early as when the strike plan surfaced, CITIC Securities issued a research report warning that if the strike is held as scheduled, it may directly impact the release of DRAM, NAND flash memory and HBM chip production capacity at Samsung's Pyeongtaek Semiconductor Park. Once the production line is shut down, the re-inspection and production line restart process required for subsequent resumption of production will be extremely time-consuming and labor-intensive.
Yonhap News Agency quoted an analysis by industry observers as saying that if this round of general strikes is finally implemented, the possible comprehensive losses to Samsung and the Korean semiconductor industry may reach 40 trillion won (approximately RMB 181.8 billion), and in the medium and long term, it may also lead to a large-scale loss of customers and forced restructuring of the supply chain structure.