Samsung and Union Resume Talks to Avert 18-Day Strike at Chip Factories

Samsung and its union have resumed government-mediated talks just 10 days before a planned 18-day strike at the company's chip factories. The strike is scheduled to start on May 21. South Korean Labor Minister Kim Young-hoon welcomed the resumption of talks, stating that "the solution may already be close."

Union demands uncapped bonuses at 15% of operating profit

The union is demanding uncapped performance bonuses set at 15% of operating profit. Management has refused to remove the cap. Workers previously rejected a one-time bonus counteroffer of $340,000. Union membership has grown to about 73,000, with expected participation of 30,000 to 40,000 workers. About 80% of union members come from the Device Solutions semiconductor division. Over 2,500 members have left the union due to memory-focused demands. The union claims that roughly 200 engineers have left for SK hynix in the past four months.

According to Digitimes, the union has warned that the strike could create a shortfall of some $20.4 billion. JPMorgan analysts estimate that Samsung's annual operating profit could fall by 7% to 12% if management accepts the union's core demands. They also estimate that allocating 10% to 15% of operating profit as performance bonuses and raising base salaries by 5% would generate additional labor costs of KRW 21 trillion to KRW 39 trillion ($14.3 billion to $26.5 billion). A separate production-disruption scenario from JPMorgan put the potential sales hit from the 18-day walkout at around KRW 4 trillion.

A previous one-day strike in April caused significant production losses. According to Tom's Hardware, Samsung's memory fab output fell 18% on the affected night shift, and its contract foundry output dropped 58%. The upcoming strike could affect high-bandwidth memory (HBM) production, a key product for AI applications. SK hynix workers are expected to receive bonuses of $477,000 this year and $900,000 next year, highlighting the competitive pressure on Samsung.

Samsung has not confirmed the potential impact of the strike. The union's estimate of a $20.4 billion shortfall has not been independently verified.