A government-mediated agreement has suspended an 18-day walkout by about 48,000 Samsung union members, easing fears of damage to South Korea's economy and global chip supply.
Samsung Electronics shares surged on Thursday (21 May) after the company clinched an 11th-hour deal with its South Korean union to avert a huge walkout, although terms including bonuses of about $416,000 for some workers raised concern.
The planned 18-day strike by about 48,000 union members has been suspended while the agreement, mediated by the government, goes to a vote from Friday (22 May) to Wednesday (27 May). The union's leader has said he expects it to be ratified.
The deal brought relief across South Korea, where Samsung accounts for about a quarter of exports. The planned strike had been expected to inflict significant damage on the economy and dent global chip supply if it went ahead.
Samsung's shares and the benchmark KOSPI both rocketed nearly 8% higher in morning trade as investors reacted to the suspension of the industrial action. The scale of the union involved made the threatened stoppage a major test for the company and for South Korea's export-dependent economy.
Ryu Young-ho, a Senior Analyst at NH Investment & Securities, said investors were relieved that the strike appeared to have been averted. He also said the agreement was not entirely positive because it had resulted in substantially higher labour costs.
The planned walkout would have involved workers at a company whose chip division houses its memory and logic chip businesses. Any disruption at Samsung had been expected to draw attention across the global semiconductor supply chain.
Samsung may face a lower immediate financial burden because performance bonuses are planned mostly in stock rather than cash, Ryu said. A union demand that 15% of operating profit be allocated towards bonuses was also pared back during the talks.
Under the agreement, Samsung is expected to set aside about 10.5% of operating profit for special bonuses for the chip division, according to the union. A document showed the bonuses would be paid in company stock for at least 10 years.
The payments are conditional on the chip division achieving more than 200 trillion won ($135 billion) in annual operating profit from 2026 to 2028 and 100 trillion won from 2029 to 2035.
A memory chip worker with a base salary of 80 million won (around $53,000) is expected to receive a bonus of about 626 million won, or $416,000, this year, mostly paid in stock, a union source said, declining to be identified.
Samsung Electronics chip division chief Jun Young-hyun urged staff in a letter seen by Reuters to leave behind the conflict and unite to strengthen the company's global competitiveness and long-term growth.
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