(6th LD) Samsung-strike
(6th LD) Samsung Electronics management, labor reach wage deal ahead of planned strike
(ATTN: ADDS statements from Samsung, labor minister in paras 6-10)
SEOUL, May 20 (Yonhap) -- Management and labor of Samsung Electronics Co. on Wednesday reached an agreement on a wage deal a day before a planned strike at the world's largest memory chipmaker.
The labor union said it decided to hold off on plans for a general strike and will put a tentative wage deal to a vote.
"We will postpone the general strike scheduled for May 21-June 7 until further notice," the joint headquarters of Samsung Electronics' labor union said in a notice.
The union said its members will participate in a vote on the tentative wage deal starting Saturday.
Choi Seung-ho (C), head of Samsung Electronics Co's largest labor union, speaks to reporters after attending the third government-led mediation talks with management to reach an agreement over performance-based bonuses at the National Labor Relations Commission office in the administrative city of Sejong, central South Korea, on May 20, 2026. (Yonhap)
Management and labor entered last-minute talks mediated by Labor Minister Kim Young-hoon earlier Wednesday as part of recent efforts to avert the planned strike at the tech giant.
"Labor and management were able to find a resolution as each side made concessions," the labor minister said during a briefing at the Gyeonggi District Employment and Labor Office.
"The two sides did not cut off communication and were able to reach a tentative agreement through voluntary negotiations," he said. "I believe in the power of dialogue in resolving common issues facing us."
Samsung Electronics also issued a formal statement, pledging to establish "constructive and mature" labor-management relations and promising to prevent similar disputes from recurring in the future.
"We will make our utmost efforts to further contribute to the national economy by fulfilling our fundamental role and responsibilities as a company," it said.
The company also said it was able to belatedly reach an agreement thanks to all stakeholders involved, including the government, employees and the public, while apologizing for "causing concern" throughout the mediation process.
About 48,000 workers had been set to walk off the job for 18 days starting Thursday after management rejected a mediation proposal that the union had accepted following the latest round of government-mediated negotiations earlier in the day.
Labor and management have been deadlocked since late last year over performance-based bonuses tied to earnings from the tech giant's artificial intelligence (AI)-related semiconductor business amid an ongoing global memory supercycle.
The company has proposed maintaining the current excess profit incentive system while allowing the bonus pool to be calculated based on 10 percent of operating profit. It also proposed introducing a special compensation system, saying it would create a more flexible incentive structure.
In contrast, the union is demanding fixed performance bonuses equal to 15 percent of the semiconductor division's operating profit, along with the removal of payout caps.
With the strike looming, the government stepped earlier this month to mediate several rounds of talks, while President Lee Jae Myung called for a smooth resolution.
Prime Minister Kim Min-seok warned of an emergency arbitration order, citing concerns about potential losses to South Korea's export-dependent economy and the possible impact on the global chip supply chain.
A traffic signal turns red in front of the headquarters of Samsung Electronics Co. in Suwon, south of Seoul, on May 20, 2026. The company's largest labor union said it will launch its planned strike the next day after wage talks with management broke down. (Yonhap)
Under South Korean law, the labor minister can issue an emergency arbitration order if a labor dispute is deemed likely to harm the national economy or seriously disrupt the daily lives of ordinary citizens.
During government-mediated talks, the two sides reached understanding on eliminating bonus caps set at 50 percent of annual salary, according to an industry source.
However, they remained divided over how bonuses should be distributed across loss-making business units and whether any agreement should be formally institutionalized.
Industry officials had warned of the astronomical impact a full-scale strike could have on the broader South Korean economy, with estimated losses reaching up to 100 trillion won (US$66.98 billion).
Semiconductor exports account for roughly 35 percent of South Korea's exports, fueled by growing investment in AI data centers.
In the first quarter of 2026, the country's exports reached a record $219.9 billion, with semiconductor shipments surging 139 percent from a year earlier to $78.5 billion.
Others warned that a strike at Samsung Electronics, which accounts for about one-quarter of the benchmark Korea Composite Stock Price Index (KOSPI) market capitalization, could accelerate declines in the stock index.
Global companies that rely on South Korea's semiconductor supply chain also expressed concerns over potential supply disruptions.
Samsung accounts for roughly one-third of the global dynamic random-access memory (DRAM) market. DRAM chips, key components in laptops and smartphones, have become essential building blocks for AI data centers worldwide.
Samsung reclaimed the top spot in the global DRAM market in the fourth quarter of last year, driven by increased sales of high-bandwidth memory (HBM) chips, according to market research firm TrendForce.
Industry estimates suggested that an 18-day strike could reduce the global DRAM supply by 3 to 4 percent and NAND flash supply by 2 to 3 percent, likely driving further price increases.
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