Key Points
- Samsung’s stock climbed over 6% in Seoul trading after the company’s labor union called off an 18-day strike following a provisional wage agreement reached late Wednesday.
- The tentative deal introduces a new bonus structure for the semiconductor division, allocating 10.5% of operating profits to be distributed as company shares.
- Performance-based bonus benchmarks are established at 200 trillion won yearly for 2026–2028, decreasing to 100 trillion won for 2029–2035.
- Employees will receive a 6.2% average pay raise for 2026, alongside enhanced child support allowances and improved housing loan terms.
- Union membership will cast ballots on the proposed agreement from May 22 through May 27, though South Korea’s labor minister warned significant challenges remain before finalization.
Shares of Samsung Electronics jumped more than 6% during Thursday’s trading session in Seoul, climbing as high as 7.6% at one point, following a provisional labor agreement struck late Wednesday evening that successfully halted an imminent 18-day strike.
Samsung Electronics Co., Ltd., SMSN.L
The planned work stoppage was set to begin May 21 and continue through June 7. However, with just 90 minutes remaining before the midnight deadline, South Korea’s Labor Minister Kim Young-hoon helped facilitate a breakthrough between the two parties.
Samsung’s shares received additional momentum from Nvidia’s impressive quarterly results announced the previous evening, which showed revenue reaching $81.62 billion — an 85% increase compared to the same period last year — creating positive momentum throughout the global semiconductor sector.
The provisional agreement establishes a restructured performance incentive program directly linked to Samsung’s semiconductor division’s financial performance. According to the terms, employees will receive bonuses derived from 10.5% of operating profits, distributed as company equity rather than direct cash payments.
Workers are permitted to liquidate one-third of their stock allocation right away. The remaining two-thirds portion must remain untouched for a period extending up to two years.
The incentive allocation will be divided with 40% distributed at the chip division level and 60% allocated to specific business units. Annual profitability thresholds are established at 200 trillion won for the 2026–2028 period, then reducing to 100 trillion won spanning 2029 through 2035.
Union Demands and Negotiations
The labor union had originally demanded bonuses equivalent to 15% of operating profits, elimination of all bonus ceiling restrictions, and formal incorporation of the bonus framework into standard employment agreements.
The union referenced competitor SK Hynix, which committed last September to allocate 10% of yearly operating profits toward employee bonuses. Samsung’s revised offer mirrored that 10% baseline, while providing the semiconductor division with an additional allocation.
The union had previously endorsed a mediation proposal presented by government arbitrators, which Samsung’s leadership declined Wednesday morning, bringing the strike possibility dangerously close to reality.
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 escalating to 100 trillion won if semiconductor manufacturing interruptions required Samsung to discard wafers mid-production.
Looking Ahead
Beyond the revised bonus framework, Samsung committed to implementing a 6.2% average salary increase for 2026, complemented by enhanced child support benefits and more favorable housing loan programs for its workforce.
The union has officially suspended strike plans and announced that all members will participate in voting on the tentative agreement during a window running from May 22 to May 27. Labor Minister Kim stressed this remains a preliminary arrangement, noting that while differences between both sides have “narrowed considerably,” unresolved matters still require attention.
Samsung’s chip manufacturing division reported a remarkable 48-fold profit surge during the March quarter, positioning the company among the world’s most lucrative enterprises for the current year.
Ha SeokKeun, chief investment officer at Eugene Asset Management, commented that Samsung had grown “undervalued relative to SK Hynix” because of strike uncertainties and anticipates “a strong rebound in Samsung’s share price.”
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
