Stocks Soar, Internal Disagreement Explodes: Samsung at Increasing Risk of Shutdown
The clash between Samsung and its employees continues. Although the company believes it is close to an agreement, the understanding seems to be quite distant. As explained repeatedly, the confrontation focuses on production bonuses: colleagues at SK hynix have obtained significantly more advantageous rewards, conditions that Samsung appears unwilling to grant. This situation contrasts with the company's record market capitalization, which has surpassed one trillion dollars.
According to reports, the company and the union would be close to an agreement that involves the allocation of 13% of the operating profits from the chip division to employees, a share that corresponds to about $340,000 per worker. The problem, however, concerns the duration of the agreement. Samsung would be willing to grant this amount as a one-time extraordinary payment, while the union insists that the bonus be permanently included in the agreement as a guaranteed annual benefit.
The protest has gained national dimensions after over 30,000 Samsung workers took to the streets at the end of April to obtain a higher share of the profits generated by the expansion of AI infrastructure, a sector that is driving up demand for advanced memory and data center chips and has ensured record profits for memory producers.
The comparison with SK hynix is clearly significant: employees of the competitor have received bonuses of about $477,000 this year, with a projection of nearly $900,000 next year, in addition to a decade-long guarantee of the award. Samsung workers deem the current offer insufficient, especially considering the size of the group compared to SK hynix. The initial demand included 15% of the operating profits, the elimination of the 50% cap on bonuses, and a salary increase of 7%. The company's counter-proposal was capped at 10%, with a salary increase of 6.2% and additional benefits such as favorable conditions on mortgages.
The compromise on 13% now seems realistic, but without an agreement on annual continuity, the possibility of a general strike from May 21 to June 7 remains. An 18-day paralysis that, as we have seen in recent days, would have repercussions of about $30 billion. Already a single protest in April caused a 58% drop in production during a shift.
According to estimates from Professor Kwon Seok-joon of Sungkyunkwan University, a prolonged shutdown could result in direct losses ranging from $6.9 billion to $11.7 billion, with even higher indirect damages. Besides the immediate economic impact, Samsung would also be at risk competitively, especially in the race for HBM4, a crucial segment for the AI market where competition among major memory producers remains intense.
The situation appears more complex compared to SK hynix also for structural reasons. Samsung's semiconductor division operates within Samsung Electronics, which is part of the broader Samsung Group. This means that a significant increase in bonuses in the chip area alone could create tensions with other divisions, such as smartphones, TVs, and home appliances, which must contend with lower margins and high costs. Notably, a smaller union made up mostly of employees from these sectors has already abandoned the plan for a joint strike. Samsung therefore faces an extremely complex decision that affects the entire corporate structure and not just the memory division.