Samsung Electronics union heads toward strike after govt-mediation talks collapse

SEOUL, May 13 (AJP) -Samsung Electronics and its largest labor union failed to bridge differences over bonuses in a final round of government-mediated wage negotiations, raising the likelihood of a monthlong strike that could ripple through the global semiconductor supply chain starting next week. 

The breakdown came after 17 hours of overnight talks at the National Labor Relations Commission in Sejong, where labor and management sought to reach a 2026 wage agreement but ultimately ended negotiations without a deal.  

Choi Seung-ho, head of the Samsung Electronics branch of the National Samsung Electronics Union, declared the post-mediation process “finally deadlocked” early Wednesday.  

“We asked for a mediation proposal because the gap between labor and management could not be narrowed, but after nearly 12 hours of waiting, the proposal turned out to be a step backward,” Choi told reporters after the talks collapsed around 3 a.m. 

The core dispute centered on whether to institutionalize and expand Samsung’s bonus system. 

The union is demanding the removal of bonus caps and the establishment of a transparent, formalized compensation structure tied to company performance. It has proposed allocating 15 percent of Samsung Electronics’ estimated annual operating profit of 270 trillion won ($194 billion) into bonus funding. 

Under the union’s proposal, average bonuses for employees in the Device Solutions (DS) memory division could reach roughly 600 million won per worker, while even loss-making nonmemory operations such as foundry and System LSI units could receive payouts exceeding 300 million won. 

Choi criticized the mediation proposal for effectively preserving the current excess profit incentive (OPI) framework, including its 50 percent bonus ceiling.  

“The proposal maintained the existing OPI system rather than introducing transparency,” he said. “The 50 percent bonus cap also remained intact.” 

Management has reportedly proposed broader compensation for struggling nonmemory divisions on the condition that losses improve, but the union rejected what it described as temporary and externally linked standards. 

Choi also objected to a proposal tying DS division bonuses to whether payouts exceeded those at SK hynix. 

“It is not desirable to connect our company’s performance to external factors,” he said, adding that the union could not accept a one-off measure lacking institutional guarantees. 

The union said it no longer intends to participate in further post-mediation proceedings, though Choi said labor would still consider listening if management presented a “proper proposal.”  

Samsung management and the union had already failed to reach an agreement during earlier mediation sessions held in February and March. The two sides resumed negotiations through a special post-mediation procedure starting Monday.

The National Labor Relations Commission said it proposed “various alternatives” based on both sides’ positions but concluded that differences remained too wide after the union requested termination of the mediation process. 

The commission added that additional mediation could still be arranged if both parties later agreed to resume talks. 

With negotiations now broken off, the possibility of a full-scale strike planned for May 21 has intensified.

The union, which claims around 73,000 members, said about 41,000 workers had already indicated their intention to join a strike, and Choi claimed participation could exceed 50,000 under the company’s current proposal. 

He stressed the union intended to proceed legally. “There is no point in waiting any longer,” Choi said. “We have no intention of engaging in illegal labor action. We will carry out lawful industrial action.” 

The union also said it would now focus on responding to Samsung’s court request for an injunction against what the company described as illegal labor activities. 

The market has been closing watching the government-mediated talks in fear of the repercussions on the chip-led exports and stock rally. Some forecasts estimate losses could exceed 40 trillion won if production disruptions spread across key semiconductor lines, while observers also warn of customer defections and long-term supply chain damage. 

The American Chamber of Commerce in Korea recently warned that disruptions at Samsung could destabilize global memory chip supply and increase price volatility. 

Concerns have also spread to suppliers and subcontractors. Samsung’s sustainability report lists roughly 1,700 partner firms across first- through third-tier supply chains, raising fears that prolonged production disruptions could trigger broader employment instability among smaller manufacturers. 

The government could still interfere through an emergency arbitration powers as a last resort. 

Under South Korea’s labor law, the labor minister may order emergency arbitration when industrial action is deemed likely to seriously damage the national economy or threaten public welfare. Such a move would ban strikes for 30 days while compulsory mediation and arbitration proceed. 

The measure has been invoked only four times in modern South Korean history, including during strikes at Hyundai Motor Company in 1993 and pilot walkouts at Asiana Airlines and Korean Air in 2005. A commission official, however, said emergency arbitration was “not a matter currently under our review.”