Samsung, union narrow some differences as major strike nears

SEJONG, South Korea - Talks between Samsung Electronics and its South Korean union are set to continue until late on May 19, a mediator said, as the government and business groups pile on pressure to avert a damaging lengthy strike.

The two sides are seeking to hash out a deal on bonus payments before nearly 48,000 workers walk off the job for 18 days on May 21.

A strike of that magnitude and length has the potential to inflict significant damage on the economy as Samsung accounts for almost a quarter of South Korea’s exports.

Samsung is also the world’s largest memory chip maker and production disruptions could dent global supply at a time when the boom in artificial intelligence has caused shortages.

Mr Park Su-keun, chairman of the ⁠National Labor Relations Commission, which is mediating the talks, said that while both sides had made concessions, they remain stuck on two key issues but declined to elaborate.

“Samsung Electronics management and the union are going to be in mediation by the commission until 10pm,” Mr Park told reporters. The talks on May 19 were earlier scheduled to conclude at 7pm.

Samsung declined to comment, while a union representative was not immediately available for comment.

While the threat of the strike has put South Korea on edge, investors have been heartened after the government threatened over the weekend to step in and order emergency arbitration.

That would prevent the strike from going ahead for 30 days while the government mediates talks.

Shares in Samsung ended 2 per cent lower on May 19, paring losses after the news of narrowing differences. The stock is down 1.3 per cent for the past week.

Industry minister Kim Jung-kwan told Parliament on May 19 that the strike “must not happen.”

“The reality is that all of our citizens are worried about this, considering the ripple effects that a Samsung strike could bring,” he said.

South Korean business groups have also urged the union not to proceed with the strike.

The strike could in a worst-case scenario shave 0.5 percentage points off a forecast 2.0 per cent expansion for the South Korean economy in 2026, according to an official from the country’s central bank, who declined to be named.

This assumes that around 30 trillion won (S$25.76 billion) of chip production could be lost and an additional “few weeks” of disruption before production lines are operating normally again.

KB analyst Jeff Kim has estimated that an 18-day strike could disrupt global supplies of DRAM memory by 3 per cent to 4 per cent and NAND memory by 2 per cent to 3 per cent, which would likely fuel further price increases.

For many investors, rather than the potential strike itself, the biggest issue is whether Samsung caves to the union’s demand to have bigger bonuses written into contracts, resulting in permanent increases in labour costs.

“The point is how they negotiate the formalising of pay increases,” said Mr Lee Seung-yub, a portfolio manager at Seoul-based hedge fund Quad Investment Management.

The union has demanded Samsung abolish a cap on bonuses that stands at 50 per cent of annual salaries, allocate 15 per cent of annual operating profit to bonuses and formalise this in contracts.

Samsung has proposed that memory chip workers receive one-off bonuses in 2026 that would top those of SK Hynix employees, while the bonus cap would stay in place.

Samsung’s widening pay gap with Hynix

The dispute is the biggest clash between Samsung and its labour union since Samsung Electronics ​chairman Lee Jae-yong pledged in 2020 to put the firm’s past union-busting activities behind it.

Samsung is one of the most sought-after workplaces in Korea, but employees have been increasingly frustrated by a widening pay gap with smaller rival SK Hynix which took an early lead in supplying high-bandwidth memory for artificial intelligence chip units to Nvidia.

SK Hynix overhauled its pay structure in 2025, resulting in bonuses more than three times higher than those offered to Samsung workers.

Samsung union members said this has accelerated an exodus of workers to SK Hynix and sparked a surge in Samsung union membership.

A court on May 18 partially granted Samsung’s request for an injunction, ruling that essential staffing levels at some production facilities must be maintained during any industrial action. Samsung has notified the union that this will require 7,087 workers to report for work even if the strike goes ahead. REUTERS