Nearly 48,000 employees of Samsung Electronics (OTC: SSNLF) are preparing to strike following unsuccessful payment discussions.
The workers are ready to walk off the job after bonus payment negotiations ended without an agreement, reported Yonhap News on Wednesday. The strike could significantly disrupt the global chip supply and impact South Korea's economy.
Despite the impending strike, hopes for a resolution were revived when talks resumed late Wednesday under the mediation of Labour Minister Kim Young-hoon. Union leader Choi Seung-ho had earlier stated that while the union had accepted a final proposal from the National Labor Relations Commission, the strike would go ahead due to unresolved issues with management.
The two sides agreed to remove bonus caps tied to 50% of annual salary, but remained split on bonus distribution for loss-making units and formalizing the agreement, as per the report.
Samsung Strike Could Hit Economy
On Friday, the Samsung labor union indicated that it would push ahead with an 18-day strike plan, starting May 21, potentially disrupting production at the world's largest memory chipmaker. The union had expressed its willingness to engage in new discussions post June 7, but remained firm on its strike plan.
Samsung, in a statement published by South Korean media outlet MoneyToday, stated that the union's "unacceptable demands", including the size of bonuses for loss-making units, were the reason an agreement could not be reached.
The chipmaker added that it "will not give up on dialogue until the last moment," and stated that "there must be no strikes under any circumstances."
South Korean President Lee Jae Myung, known for his union-friendly stance, also criticized a certain union for "crossing the line" by demanding a share of a company's operating profit before paying income tax. Industry officials told Yonhap that a full-scale strike could cost South Korea's economy up to 100 trillion won ($66.98 billion).
Jing Jie Yu, an equity analyst at Morningstar, warned Samsung could lose ground to rivals due to weaker employee compensation, noting that SK Hynix offers more generous profit-sharing, and estimated an 18-day strike could reduce Samsung's 2026 operating profit by about 5%, reported Business Insider on Tuesday.