Key Takeaways
- Shares of Samsung jumped more than 6% in Seoul trading after the company’s labor union called off an 18-day strike following a tentative wage agreement reached late Wednesday.
- The agreement introduces a performance-based bonus structure for the semiconductor division, allocating 10.5% of operating profits to be distributed as company stock.
- Annual profit targets of 200 trillion won are established for 2026 through 2028, decreasing to 100 trillion won for the period spanning 2029 to 2035.
- Employees will receive an average salary hike of 6.2% for 2026, alongside enhanced benefits for childcare support and housing loans.
- Union members are scheduled to cast their votes on the tentative agreement from May 22 through May 27, though South Korea’s labor minister warned that “considerable distance” remains before finalization.
Shares of Samsung Electronics climbed more than 6% during Thursday’s Seoul trading session, reaching intraday highs of 7.6%, following a late-night tentative agreement between the electronics giant and its labor union that halted what would have been an 18-day work stoppage.
Samsung Electronics Co., Ltd., SMSN.L
The strike was originally set to commence May 21 and continue through June 7. With merely 90 minutes remaining before the midnight deadline, negotiators reached a breakthrough following intensive mediation efforts led by South Korea’s Labor Minister Kim Young-hoon.
The semiconductor manufacturer’s shares received additional support from robust quarterly results announced by Nvidia, which reported revenue of $81.62 billion — representing an 85% year-over-year increase — creating positive momentum throughout global chip sector equities.
At the heart of the provisional agreement lies a restructured performance bonus framework connected to Samsung’s semiconductor division profitability. According to the terms, employees will receive bonuses financed through 10.5% of operating profit, distributed as company shares instead of cash compensation.
Workers have the option to liquidate one-third of their allocated stock right away. The balance must be retained for a maximum of two years.
The incentive compensation will be allocated with 40% distributed at the chip division level and 60% channeled to specific business units. Financial benchmarks call for 200 trillion won yearly from 2026 through 2028, before declining to 100 trillion won annually between 2029 and 2035.
Union Demands and Negotiations
The labor union initially demanded bonuses equivalent to 15% of operating profit, elimination of bonus ceiling restrictions, and codification of the bonus framework directly into employment agreements.
They referenced competitor SK Hynix, which committed last September to allocate 10% of annual operating profit toward employee bonuses. Samsung’s counteroffer aligned with that 10% benchmark, while providing the chip division with supplementary allocation.
The union had previously endorsed a compromise proposed by government arbitrators that Samsung’s executive leadership rejected Wednesday morning, bringing the strike to the precipice once again.
South Korean Prime Minister Kim Min-seok projected that direct financial losses from an 18-day work stoppage could total 1 trillion won, with broader economic consequences potentially reaching 100 trillion won should chip manufacturing interruptions compel Samsung to discard wafers currently in production.
Next Steps Forward
Beyond the revised bonus program, Samsung consented to an average salary increase of 6.2% for 2026, coupled with enhanced childcare subsidies and improved housing loan programs for employees.
The union verified the strike suspension and announced that all members will participate in voting on the proposed terms between May 22 and May 27. Labor Minister Kim stressed that this represents a provisional arrangement, noting the divide between parties has “narrowed considerably” while warning that unresolved matters persist.
Samsung’s chip business reported a 48-fold profit surge for the quarter ending in March, positioning the corporation among the globe’s most profitable enterprises this year.
Ha SeokKeun, chief investment officer at Eugene Asset Management, noted that Samsung had become “undervalued relative to SK Hynix” due to labor disruption uncertainties and anticipates “a strong rebound in Samsung’s share price.”
