The South Korean Samsung Electronics union had planned a large-scale strike today (May 21), but unexpectedly, labor-management negotiations reached a preliminary performance bonus agreement late last night (May 20). The original strike plan was also announced to be postponed and will be put to a vote by all union members in late May, temporarily putting a pause on the labor dispute that has been escalating recently.
This labor-management struggle has gone through multiple rounds of impasses and government mediation, even prompting the personal intervention of the South Korean presidential office and the Minister of Labor. There were initial concerns that if the Samsung strike officially began, it could not only impact South Korea's export-oriented economy but also potentially destabilize the global semiconductor supply chain.
According to multiple media reports, Samsung Electronics' labor union and management signed a provisional agreement late on the 20th. Both parties decided to add a "Special Operating Performance Bonus" specifically for the Semiconductor and Device Solutions (DS) business unit, in addition to the existing performance bonus system. Samsung will allocate 10.5% of the semiconductor business's revenue as this special bonus, with no upper limit on its distribution.
Samsung union chairman Choi Seung-ho stated that he expects the agreement to pass a member vote smoothly. The union website indicates that the member vote is scheduled to take place between May 23 and 28.
According to the agreement, part of the special bonus will be distributed in the form of company stock and will be gradually paid out over 10 years, provided that Samsung Semiconductor achieves specific operating targets, including annual operating profit of more than 200 trillion won between 2026 and 2028, and more than 100 trillion won annually between 2029 and 2035.
Based on market estimates that Samsung's semiconductor operating profit this year will be around 300 trillion yuan, each of the approximately 2.8 employees in the DS division could potentially receive a special performance bonus of up to 6 million yuan.
Regarding the overall bonus distribution, 40% will be shared by the entire semiconductor division, while the remaining 60% will be allocated based on the performance of each business unit. The previously most contentious issue of whether loss-making departments should also receive high bonuses has also been resolved with a consensus.
Another union representative involved in the negotiations revealed that Samsung agreed to remove the previous cap on performance bonuses not exceeding 50% of salary and formally included "bonuses linked to operating profits" in the contract. The representative described it as a "very successful agreement."
Previous analyses have pointed out that Samsung is extremely important to the South Korean economy and stock market, accounting for nearly 1/4 of the market capitalization in the Korea Composite Stock Price Index (KOSPI). If semiconductor production lines were to shut down, in addition to the potential economic losses of up to 100 trillion won, it could also further affect the stability of the global supply of artificial intelligence (AI) chips and memory.
