South Korea’s Samsung Electronics is facing its largest potential labour action in years, with tens of thousands of workers preparing for a prolonged strike over bonuses and profit-sharing at a time when the company is benefiting from a global artificial intelligence (AI) driven chip boom.
The strike action is scheduled to begin on 21 May, with workers planning an initial 18-day industrial action period if no agreement is reached.
The dispute has raised concerns about possible disruptions to semiconductor production and the broader memory chip supply chain.
Samsung’s labour union is calling for major changes to the company’s bonus system.
The union wants Samsung to abolish its current cap that limits performance bonuses to 50% of annual salaries. It is also demanding that 15% of annual operating profit be allocated to a bonus pool distributed among employees.
It further wants these changes to be made permanent and written into binding agreements rather than offered as temporary or one-off payments.
Union representatives say the current system does not reflect Samsung’s strong profitability in the AI-driven semiconductor cycle and argue that employees should receive a larger share of gains.
They also point to compensation practices at rival SK Hynix, which union officials say has expanded its bonus payouts after restructuring its incentive system in recent years.
Samsung has rejected calls to remove the bonus cap.
Instead, the company has proposed one-off bonus increases for this year. Under its proposal, memory chip employees would receive higher bonuses than those at SK Hynix, while employees in logic chip and foundry businesses would receive bonuses ranging from 50% to 100% of annual salary, depending on performance.
Samsung has said compensation should reflect business performance across divisions and argued that different business units contribute differently to profitability.
The company has also warned that a strike could disrupt production and damage customer confidence at a time of strong global demand for memory chips.
The dispute comes during a period of strong profitability for Samsung’s semiconductor business, driven by rising demand linked to AI applications and global supply constraints.
Union leaders say dissatisfaction has increased due to perceived pay disparities with SK Hynix. They cite significantly higher bonus levels at the rival chipmaker, although those figures are based on union statements and industry reporting rather than independently verified company-wide comparisons.
The issue has also highlighted internal tensions between Samsung’s memory, logic chip, and foundry divisions, which have performed unevenly in recent years.
Samsung’s union says nearly 48,000 workers (around 38% of Samsung Electronics’ domestic workforce) have signed up to participate in an 18-day strike, most of them in chip-related roles.
A court has partially granted Samsung’s request for an injunction requiring minimum staffing levels at key facilities during any strike. This means a portion of employees would still be required to work even if industrial action proceeds.
Samsung’s semiconductor plants in South Korea operate around the clock, making sustained disruption potentially more significant than previous labour actions at the company.
At the same time, talks between management and the union are ongoing, with government mediation also under consideration.
Authorities have indicated they could impose emergency arbitration, which would suspend strike action for up to 30 days to allow negotiations to continue.
Analysts say a prolonged strike could disrupt global memory chip supply, though estimates vary and remain uncertain.
Research firms and brokerage analysts have suggested that an 18-day disruption could reduce output of DRAM and NAND chips by a few percentage points, potentially tightening already sensitive global markets driven by AI demand.
South Korean government officials have also warned about the impact of a strike as Samsung accounts for nearly a quarter of Korea's exports.
The Bank of Korea has said a severe disruption scenario could reduce national economic growth, depending on the scale and duration of lost production, although such estimates are conditional.
For investors, the key concern is not only short-term production losses, but whether any settlement leads to permanently higher labour costs if bonus structures are formally revised.
An official at South 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% expansion in the South 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.
Negotiations are continuing under pressure from the South Korean government, which has urged both sides to reach a compromise to avoid wider economic disruption.
A deal remains possible if both sides agree on enhanced bonuses without removing the existing cap system.
If talks fail, Samsung could face one of the most significant labour actions in its history, with potential implications for global semiconductor supply chains and South Korea’s export performance.
Saudi Arabia’s air defences have intercepted and destroyed a hostile drone over the Riyadh region, according to the Saudi-led coalition fight...
Police were deployed across Paris on Saturday, as a curfew was set to take effect in the Republique and Chât...
A drone strike hit a power station in northern Sudan early Sunday (1 November), sparking a fire and triggering loud explosions, witnesses said....
The U.S. has approved the sale of 500 Patriot PAC-3 missiles to Ukraine in a deal worth an estimated $2.1 billion, but Kyiv could face years of delays before receiving the weapons it urgently needs to defend against intensifying Russian attacks.
Iranian Supreme Leader Ayatollah Khamenei has ordered Iran's armed forces to respond to any threat immediately and without geographical limits in statements posted to social media platforms on Saturday (31 October).
Demonstrators carrying Iranian flags and placards supporting the hijab gathered outside the Azerbaijani Embassy in London.
A Chinese-made AI chip has matched Nvidia’s H200 in tests conducted by its developer, marking a potential breakthrough in China’s efforts to reduce its dependence on foreign technology.
A hacking group linked to North Korea is widely believed to be behind the theft of $6.3 billion from cryptocurrency giant Binance, a cyberattack that experts describe as the largest cryptocurrency heist on record.
Cryptocurrencies are volatile, and their crashes make headlines. But does a slump in digital coins ever spill over into the pounds, dollars and euros in people's bank accounts? The short answer is not directly, but indirectly it can, and regulators are increasingly worried about how.
Russian President Vladimir Putin has praised record trade with Egypt as Moscow seeks to use its economic ties with Cairo to expand its influence across Africa, with a focus on manufacturing, infrastructure and energy.
Kazakhstan could begin building its first nuclear power plant in 2027, President Kassym-Jomart Tokayev said on 28 October, according to Azertac. But as Central Asia steps up its energy ambitions, which countries are investing in nuclear power and which are pursuing alternatives?
Apple's latest iPhone 18 Pro series has outperformed its predecessor in early global sales, even as rising manufacturing costs and weaker demand in some markets put pressure on the smartphone industry, according to Counterpoint Research data released on Tuesday (27 October).
Uzbekistan is moving into a new phase in the development of Islamic finance, with the country’s first Islamic banking licence issued shortly before a regional forum in Samarkand brought together industry players to discuss how the sector can expand across Central Asia.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment