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.
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