Seoul: Samsung Electronics Co. and its largest labor union resumed government-led wage mediation Tuesday, signaling the final day of negotiations in a bid to prevent a looming strike at the world's top memory chipmaker.
According to Yonhap News Agency, the two-day talks resumed after the initial mediation round concluded without agreement, with both parties at an impasse over performance-based bonuses. The strike is scheduled to commence in 18 days, on Thursday, if no resolution is reached. The core disagreement centers on bonuses linked to earnings from Samsung's burgeoning artificial intelligence (AI)-focused semiconductor sector, amid an ongoing global memory supercycle.
Samsung has suggested maintaining the current excess profit incentive structure, which would calculate the bonus pool at 10 percent of operating profit. Additionally, the company proposed a special compensation system aimed at creating a more adaptable incentive framework. Conversely, the union is pushing for fixed performance bonuses equivalent to 15 percent of the semiconductor division's operating profit, while also seeking the removal of existing payout caps.
Discrepancies also persist regarding the distribution of performance bonuses to other loss-making business units. Industry insiders reveal that the union has suggested allocating 70 percent of the semiconductor bonus pool across the entire division, with the balance distributed based on individual business unit performance. Management, however, opposes this, arguing it could incentivize underperforming units and weaken performance-based rewards. They advocate for a reduced overall allocation rate for such payouts.
Samsung Electronics' chip division achieved a record operating profit of 53.7 trillion won (US$35.8 billion) in the first quarter of this year. While the memory segment was likely very profitable, non-memory divisions are believed to have faced losses. Industry experts caution that a strike could potentially cost the South Korean economy up to 100 trillion won, given the nation's substantial reliance on semiconductor exports.