Word came out this week that Samsung Electronics and its union members have reached a deal that staves off a threatened strike that could have had a global impact. Samsung is the world’s largest manufacturer of memory chips, and as the chip manufacturing employees’ contract was up for renewal, negotiations were challenging. However, with 90 minutes left before the strike deadline, the parties reached an agreement that includes a bonus that will average $340,000 per employee in the chip manufacturing division.
Learn all about the narrowly averted Samsung chip division strike…
Whew! That was a close one. Strata-gee has reported on the long-running feud between union employees and Samsung management. But this year, fortune smiled down on the union, thanks to a global shortage of memory chips, which are necessary for almost all electronic products, but especially for data centers, which have an unprecedented level of demand in this day and age of artificial intelligence (AI). The company has huge pressure to keep the machines running at full tilt to help meet this demand.
The relationship between the union and management has not been good for some years now, with management often having the upper hand. But now, the union wasted no time in voting to strike if the company did not come to the table with a good offer.
The Threat was Very Real
With 78,000 union members, the threat of a strike was very real, and potentially extremely damaging for Samsung…and for the global supply of memory chips. While the negotiations were difficult, the parties managed to come to a resolution just 90 minutes before workers were set to walk off the production line…and onto the picket line.
This clears up a massive headache that’s been hanging over them for months. But the way the deal went down left a lot of people at Samsung feeling pretty bitter – they will need to work on fixing this internal divide and getting everyone back on the same page.
Kim Dae Jong, Sejong University Business School Professor
A $340,000 Bonus Per Chip Division Worker
According to a report by Bloomberg, Samsung is on track to become one of the world’s most profitable companies this year. Its semiconductor division posted a massive 48-fold jump in profits for the March quarter. With profits at an all-time high and memory chip demand soaring, the company likely knew it had no choice but to come up with a reasonable offer for workers. In that vein, it has agreed to a much more generous annual bonus for workers this year, offering them an average bonus of 513 million South Korean won per employee. That is the equivalent of an average of approximately $340,000 per worker.
That number comes from a calculation by Bloomberg based on the terms and estimates for 2026 operating profit. Last year, workers received a bonus of 158 million won, so this is a significant 3x+ increase. Again, that is an average. Workers will get varying amounts based on a variety of factors. Not surprisingly, over 80% of the largest union group voted in favor of the deal.
However, Not All Union Members are Happy
However, not all union members at Samsung are happy. The company has one large union (mostly covering semiconductor workers) and a couple of other smaller unions covering workers in other divisions. This new deal with the semiconductor division workers is the richest deal within the company…by far. There is as much as a 100-fold difference in the bonuses for semiconductor workers, compared to the bonuses for workers in other divisions.
Consequently, only 21% of the Samsung union employees in the smaller unions covering the non-semiconductor divisions voted to approve the deal. There is some concern about the lack of unity with the other unions, which typically work together.
Samsung Stock Lept 8% on the News of a Deal
While there were some disappointing moments during this wage bargaining process, I believe that management and labor have reached a meaningful agreement after prolonged dialogue and discussion.
Choi Seung-ho, lead negotiator for the union
The value of Samsung stock shares lept 8% after the announcement that the company had reached a deal with the union was circulated.
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