By Kwanwoo Jun
Samsung Electronics' management and its union leaders failed to reach a bonus-pay deal in last-minute talks aimed at averting a strike at the world's largest memory-chip maker.
Samsung's management said it couldn't accept the union's demands, which include performance-based bonuses even for employees at its unprofitable business units, the South Korean chip maker said Wednesday.
Labor leader Choi Seung-ho said that management had rejected a government-mediated proposal that the union had accepted. Leaders of the union said the strike will proceed as planned, from May 21 through June 7.
It is still unclear if unionized Samsung workers will strike from Thursday as the South Korean government had earlier warned that it could invoke emergency mediation powers to stop the strike for a month and force a settlement if negotiations fail.
"There should be no strike under any circumstances," Samsung said, adding that it was still open to dialogue with the union to avoid the industrial action.
Even if strikes begin on Thursday, its impact could be limited as a local court earlier this week partially granted the company's injunction against the strike. The court ordered the union to maintain normal operations at certain key production facilities during industrial action, according to Samsung.
Negotiators had failed to agree over how Samsung's huge profits should be shared. The union demanded that the company allocate 15% of its annual operating profit to employee bonuses, but management rejected the call because it would exceed the company's bonus cap, currently set at 50% of annual salary. Union leaders also called for the cap to be removed, a demand company executives likewise turned down.
Prime Minister Kim Min-seok has said that a strike could wreak havoc on the economy, noting that Samsung accounts for about 23% of South Korea's total exports and 26% of the local stock market. The technology titan also employs more than 120,000 people and works with 1,700 contract suppliers, he said.
Kim noted that suspended operations at Samsung's chip assembly lines could cause economic losses of up to 1 trillion won, equivalent to $663.1 million, every day. Economic damage from the labor unrest could also balloon to as much as 100 trillion won if wafers have to be discarded because of a strike.
An 18-day strike could reduce Samsung's operating profit by roughly 5% this year, according to Morningstar analyst Jing Jie Yu in a research note. He also warned that less competitive compensation could prompt talent outflows, especially in its memory division. He reckoned that a talent drain in 2019 caused Samsung to fall behind in developing certain high-bandwidth memory products and miss out on strong demand in 2024 and 2025.
Samsung's shares are likely to have largely priced in concerns about a strike, KB Securities analysts said in a note. They added that an easing of the uncertainty surrounding the labor dispute could lift shares. Samsung's operating profit is expected to surge 19-fold from a year earlier to around 90 trillion won in the second quarter, fueled by stronger-than-expected memory-chip prices and brisk demand from big tech companies, the analysts led by Jeff Kim said.
Samsung's shares closed 0.2% higher Wednesday, after falling over 4% earlier in the session.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
May 20, 2026 03:12 ET (07:12 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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