Samsung Electronics Union Secures Legal Right to Strike

Tension is mounting in South Korea's semiconductor industry as the Samsung Electronics labor union has announced a general strike scheduled for May. The National Samsung Electronics Labor Union announced on the 19th that it will hold a press conference on the morning of the 23rd in front of Samsung Electronics Chairman Lee Jae-yong's residence in Yongsan-gu, Seoul, to declare the initiation of industrial action.

The Samsung Electronics Union Joint Struggle Committee secured legal strike rights with an overwhelming 93.1% approval rate in a strike vote conducted from the 9th. Out of 89,874 registered union members, 66,019 participated in the vote, recording a turnout of 73.5%.

The Joint Struggle Committee has confirmed an 18-day general strike from May 21 to June 7. This will be the second strike since Samsung Electronics was founded in 1969, following a 25-day strike in July 2024.

Background of Wage Negotiation Breakdown

The core of the labor-management conflict centers on the performance bonus system and wage increase rates. The union demanded ▲transparency in performance bonus calculation criteria ▲abolition of performance bonus caps ▲7% wage increase.

In response, Samsung Electronics proposed allowing employees to choose between Economic Value Added (EVA) of 20% or operating profit of 10% for the Overachievement Performance Incentive (OPI) fund, along with a 6.2% wage increase, 20 treasury shares, and raising salary caps by job grade. However, the union rejected these proposals.

Labor and management formed a joint negotiation team in November last year and held discussions for about three months, but failed to narrow their differences. The union declared negotiation breakdown on the 19th of last month. The National Labor Relations Commission issued a mediation suspension decision at its second mediation meeting on the 3rd, prompting the union to transform the joint negotiation team into a joint struggle committee to secure strike rights.

Strike Coincides with HBM4 Mass Production—Up to 9 Trillion Won in Losses Expected

This strike raises concerns as it coincides with Samsung Electronics' attempt to rebound after more than two years of poor performance. Samsung Electronics took the lead in recovering dominance in the global AI memory market by becoming the world's first to mass-produce and ship the highest-performance fourth-generation High Bandwidth Memory (HBM4) last month.

Industry experts estimate that if the 18-day strike becomes reality, operating profit losses could range from a minimum of 5 trillion won to a maximum of 9 trillion won. An estimated 70-80% of members from the largest union, the super-enterprise union, are known to belong to the Device Solutions (DS) division responsible for memory semiconductors. The DS division accounts for an absolute majority of the company's performance, contributing 16.4 trillion won out of 20 trillion won in total operating profit in the fourth quarter of last year.

Samsung Electronics recorded its largest-ever revenue of 334 trillion won and operating profit of 44 trillion won (4th highest ever) last year, and is aiming to achieve 200 trillion won in operating profit this year. However, this strike is expected to inevitably disrupt these plans.

Samsung Electronics stated, "We will do our best to smoothly conclude the 2026 wage negotiations." The announcement of securing strike rights on the same day as Samsung Electronics' 57th regular shareholders' meeting held on the 18th further heightened internal tensions.