Samsung, the South Korean chipmaking giant, is set to begin an 18-day strike, raising concerns within the Korean government, unsettling foreign investors, and posing potential threats to the global supply chain. At the heart of the conflict lies a critical issue: who should benefit from the artificial intelligence industry boom?
With labor and management failing to reach an agreement on bonus distribution plans, over 45,000 Samsung employees have threatened to launch the company's largest-ever strike starting May 21. This strike is expected to directly reduce production capacity for memory chips, which are core components in AI data centers, smartphones, and laptops.
Benefiting from the global shortage in memory chip supply, Samsung Electronics has reaped substantial profits, and the company is willing to offer high bonuses to employees. However, Samsung has proposed that bonuses for 27,000 employees in memory chip roles be at least five times higher than those for the remaining employees in logic chip design and manufacturing divisions.
The union has strongly opposed this proposal. The other 23,000 employees are responsible for developing and producing AI chips for companies like Tesla and NVIDIA, and many of them work in the same areas as memory division staff. Despite the ongoing downturn and consecutive annual losses in Samsung's foundry business in recent years, these employees argue they should not be marginalized by significant disparities in salary and benefits.
A review of hundreds of pages of Samsung's internal salary negotiation records and interviews with over a dozen current employees, including union officials, and insiders reveal the full scope of the situation.
The interviews highlight sharp internal conflicts and a talent drain within the company, pointing to how this labor dispute could impact Samsung's unique development goal: unlike specialized chip companies such as Micron and TSMC, Samsung aims to become the world's only comprehensive, one-stop semiconductor service provider, covering the research, production, and support services for all types of chips.
The exposed departmental conflicts and employee attrition issues have never been publicly disclosed before.
According to JPMorgan's estimates, the strike could result in Samsung losing 21 trillion to 31 trillion won (approximately $140.8 billion to $207.9 billion) in operating profits and about 4.5 trillion won in revenue.
Samsung's Device Solutions Division operates three main businesses: memory chips, system large-scale integration circuits, and foundry services. The AI boom has significantly widened the profit gaps among these three sectors. Currently, Samsung leads the global market in memory chip sales while also being involved in consumer electronics such as TVs and smartphones.
Lee Nam-hyu, Chairman of the Korea Corporate Governance Service and a professor at Yonsei University, stated on social media that this dispute is largely a result of Samsung's own operational structure.
He noted that Samsung's forced integration of diverse businesses has not only created a complex and bloated operational system, leading to undervaluation of the company, but also fostered internal conflicts and constrained business development. Samsung must push for greater independence in its foundry business to thrive.
Talent Drain Crisis
Since last year, dissatisfaction among Samsung employees has been growing. Competitor SK Hynix removed its decade-long bonus cap, with employee bonuses at times reaching more than three times those of Samsung employees, prompting a significant exodus of Samsung's technical talent.
Salary negotiation records show that Samsung proposed a new bonus plan in March: memory chip employees could receive year-end bonuses of up to 607% of their annual salary, surpassing the compensation offered by SK Hynix. Previously, Samsung had maintained uniform bonus standards for both memory and logic chip employees.
Under the new plan, employees in logic chip roles, which focus on core products like AI base chips, would receive bonuses of only 50% to 100% of their annual salary.
Union representatives warn that the significant bonus gap could force logic chip talent to either transfer to the memory division or leave the company altogether, severely hindering business development. Samsung Chairman Lee Jae-yong had previously set a goal to become the global leader in the logic chip industry by 2030.
During negotiations, union leader Choi Seung-ho stated, "When memory division employees receive 500 million won in bonuses, while foundry employees get only 80 million won, who would remain motivated?"
Multiple employees confirmed that talent attrition has become commonplace. A foundry engineer surnamed Lee at the Pyeongtaek facility reported that his team has significantly shrunk over the past two years, with many colleagues transferring to Samsung's memory division or joining SK Hynix. Other anonymous employees revealed that many colleagues have applied to SK Hynix and other competitors. SK Hynix has not yet responded to these claims.
The union has put forward two core demands: remove the 50% annual salary cap on bonuses and allocate 15% of the company's annual operating profits into a unified bonus pool for all employees.
Samsung's negotiation team, however, insists that performance bonuses must be distributed based on departmental performance.
Kim Hyung-rok, a Samsung executive and negotiator, stated, "The logic chip business has been losing trillions of won annually. Without the company's overall support, this division would have already shut down, making it ineligible for high performance bonuses. The company remains committed to this sector and continues to invest heavily in production lines, with all funding coming from the profits of the memory chip business."
Samsung officially responded that logic chips are a strategic core sector for the company's long-term plans, and it remains committed to continuous investment. The latest salary proposal is designed to offer employees industry-leading compensation.
Samsung also warned that if the strike proceeds, delays in order deliveries could permanently damage customer trust.
Chain of Negative Impacts
Samsung's leadership, the Korean government, and domestic and international investors are concerned that the strike could not only severely impact the company's operations but also harm Korea's overall economy.
In an internal memo earlier this month, Samsung's Chairman mentioned that the strike could lead to a series of chain reactions, including capital outflow, reduced national tax revenue, and a weaker Korean won.
At the end of April, Korean President Lee Jae-myung publicly stated that some union demands were overly radical, with many interpreting his remarks as directly targeting Samsung's union.
The American Chamber of Commerce in Korea warned that labor unrest could undermine Korea's reputation as a reliable partner in global manufacturing and supply chains.
Industry analysts believe this labor dispute has become a significant indicator of the future direction of labor relations in Korea.
Park Ji-sun, a law professor at Korea University, noted, "If Samsung sets a precedent by yielding to union demands under the pressure of a strike, other major Korean companies could find themselves in a passive position during future labor negotiations."
Protesting employees expressed that Samsung is disregarding the significant contributions made by grassroots employees to the company's rise as a global industry leader.
A chip researcher with 30 years of experience, speaking at a rally of over 40,000 people, admitted that many colleagues have left the company and that he has already applied for a position at Micron.
He angrily stated, "Participating in the protest stems from deep frustration. I can no longer focus on my work, and I no longer feel any pride in being a Samsung employee."
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