On May 22, Bloomberg reported that Samsung Electronics this week avoided a strike that could have catastrophic consequences, reaching a preliminary agreement at the last minute with the leader of its largest union to distribute more profits from the AI ​​boom to employees. However, not everyone inside the $1.1 trillion tech giant is satisfied.


Pedestrians in front of Samsung Pyeongtaek Semiconductor Factory

In Samsung's fast-growing memory chip division, some employees can receive bonuses of about 600 million won (approximately 2.69 million yuan), while employees who produce smartphones, TVs and home appliances can only receive bonuses of 6 million won. This 100-fold gap has exacerbated strong dissatisfaction within Samsung over the uneven distribution of rewards.

With Samsung on track to become one of the world's most profitable companies by the end of the year, employees are demanding a bigger share of profits. Samsung is the world's largest supplier of memory chips, and its products are widely used in smartphones, electric vehicles, and AI data center servers that power services such as OpenAI's ChatGPT and Anthropic's Claude.

Leaders of Samsung's largest union, where nearly 90% of its members are chip workers, believe they have achieved a victory in wage negotiations. Just 90 minutes before the strike was scheduled to begin, the two sides reached a preliminary agreement: the company would give out stock bonuses equivalent to 10.5% of operating profits, and an additional 1.5% cash bonus.

Two benefits from one company

However, employees in other departments feel they have been systematically excluded. According to South Korea's JTBC News, some employees have begun wearing black ribbons (usually used for mourning) on ​​their chests to express their dissatisfaction and disappointment with the agreement.

"Samsung is one company," said Lee Ho-seo, head of Samsung's smaller union. The union’s members mainly come from Samsung’s finished product business unit, namely the Digital Experience (DX) department. “We collaborate with each other and can overcome difficulties together every time we encounter a crisis. But now that the performance is good, it is said that only the departments that create performance can get bonuses, which makes no sense at all.”


The chip department generates the largest profits

For decades, Samsung's smartphone-focused DX unit has served as a financial safety net for the entire company. When the semiconductor sector went through a down cycle, it faced losses due to the high fixed costs of operating wafer fabs and volatile memory chip prices.

In early 2023, when a serious memory chip oversupply crisis hit, the chip division borrowed 20 trillion won from Samsung's display division to maintain its large-scale investment in equipment and research and development. Even when its chip business was unprofitable, profits from its popular Galaxy smartphone series allowed Samsung to continue building factories. This strategy ultimately helped Samsung defeat its competitors and catch up with the current wave of AI development.

Overturn the agreement

Since the preliminary agreement on bonuses for chip department employees was announced, the wind direction within Samsung has changed. This week, a union representing employees in the digital experience department filed for an injunction in court, trying to prevent the largest union dominated by the chip unit from continuing to be responsible for collective bargaining. The leadership of the smaller union is seeking to overturn the preliminary agreement, arguing that the largest union excessively favors the chip unit at the expense of other business units.

Members of Samsung's largest union will vote on the deal by Wednesday, with only a simple majority needed to pass it.

Jun Young-hyun, CEO of Samsung's semiconductor business, wrote in an internal memo on Thursday that the company hopes to "end this period of conflict as soon as possible." He said that if the company could get back to being "united on a basis of mutual respect and trust," it could "make even bigger leaps again."

However, the proposed bonus deal could inadvertently fragment the company's workforce. Samsung's smaller union said its membership had jumped from 3,000 before the proposal to nearly 13,000 on Friday afternoon.


Lee Jae-yong

This divide exists even within the semiconductor sector. Due to different performance distribution ratios, employees in loss-making business units such as foundry and system LSI will receive far less bonuses than colleagues in the storage department. This has prompted complaints of "unfairness" from those who provide the critical technical foundation for the storage sector's success.

Samsung Chairman Jay Y Lee made a rare public comment during the standoff, saying: "Union members, Samsung family, we are one, a big family." However, the outpouring of dissatisfaction on Samsung's internal message boards and public online forums suggests that many Samsung employees do not see it that way.

"This agreement forces us to think: Are memory chip employees getting the largest share of bonuses because they are better, or just because they happen to be at the forefront of the AI ​​revolution?" said Brandon Cho, CEO of semiconductor design company Semifive Inc. "We are going through an industrial change comparable to the scale of the 19th century. How to distribute these extraordinary profits is not just a problem for Samsung, but a topic being discussed around the world."