Seoul: Wage talks between Samsung Electronics Co. and its largest labor union broke down Wednesday, just one day before a major strike at the world's largest memory chipmaker. About 48,000 workers are set to walk off the job for 18 days starting Thursday after management rejected a mediation proposal that the union had accepted following rounds of government-mediated negotiations. "We accepted the mediator's proposal," the company's largest union stated, affirming its plan to proceed with the legally scheduled general strike.
According to Yonhap News Agency, Samsung management expressed "deep regret" over the breakdown in talks and urged the union to continue negotiations, emphasizing that a strike should not occur under any circumstances. The company asserted that despite largely incorporating the union's demands, it was unreasonable to agree to a large compensation package for loss-making business units. Park Soo-keun, head of the National Labor Relations Commission, mentioned that a mediation proposal had been accepted by the union but declined by the company.
The labor dispute has roots in disagreements over performance-based bonuses linked to earnings from Samsung's AI-related semiconductor business amid an ongoing global memory supercycle. The company had proposed maintaining the current excess profit incentive system and allowing the bonus pool to be calculated based on 10 percent of operating profit, while also proposing a special compensation system for more flexible incentives. Contrarily, the union demanded fixed performance bonuses equal to 15 percent of the semiconductor division's operating profit and sought the removal of payout caps.
The deadlock has persisted since late last year. Although the two parties reached an understanding on eliminating bonus caps set at 50 percent of annual salary during government-mediated talks, they remain divided on bonus distribution across loss-making units and whether any agreement should be formalized.
Industry officials caution that a full-scale strike could have a significant impact on the South Korean economy, with potential losses estimated up to 100 trillion won (US$66.98 billion). Semiconductor exports constitute roughly 35 percent of South Korea's exports, supported by growing AI data center investments. In the first quarter of 2026, the country's exports reached a record $219.9 billion, with semiconductor shipments surging 139 percent from the previous year to $78.5 billion.
A strike at Samsung Electronics, which represents about one-quarter of the KOSPI market capitalization, could exacerbate declines in the stock index. Consequently, government officials have expressed concern, with some suggesting that Seoul could invoke emergency arbitration powers to prevent a walkout.
Global companies dependent on South Korea's semiconductor supply chain have also raised concerns over potential supply disruptions. Samsung, which controls approximately one-third of the global DRAM market, could see an 18-day strike reduce the global DRAM supply by 3 to 4 percent and the NAND flash supply by 2 to 3 percent, likely causing further price increases. Samsung reclaimed the top spot in the global DRAM market in the fourth quarter of last year, fueled by increased sales of high-bandwidth memory chips, according to market research firm TrendForce.