Samsung Electronics’ labor union members chant slogans on April 23 during a protest against company’s compensation levels ahead of a planned lengthy strike in front of Samsung Electronics semiconductor plant in Pyeongtaek, Gyeonggi. [REUTERS/YONHAP]
Samsung Electronics is facing the possibility of an unprecedented strike at its semiconductor division as labor tensions escalate over union demands for profit-based bonuses, prompting government and industry officials to warn of major disruptions to Korea’s economy and chip supply chain.
With a general strike scheduled for Thursday, executives from Samsung’s Device Solutions (DS) division and Labor Minister Kim Young-hoon have visited the union in an effort to prevent a walkout. But the union has refused to back down.
The dispute has even prompted discussion of an emergency arbitration order, which would allow the government to temporarily halt the strike and force both sides into a government-led mediation process, a measure not used in 21 years.
Industry Minister Kim Jung-kwan said on Thursday that the government may have to step in and temporarily halt the strike through “emergency mediation.”
“If factories stop operating, production losses could reach as much as 1 trillion won ($667 million) a day,” Kim said. “The damage could climb as high as 100 trillion won if wafers already in production sustain damage because semiconductor manufacturing requires more than five months of continuous processing.”
He added that roughly 1,700 suppliers could also suffer secondary damage.
A shutdown at a semiconductor production line causes far greater losses than stoppages in industries such as automobiles or heavy manufacturing.
The Samsung Electronics logo is seen at a store in Seoul on April 15, 2025. [REUTERS/YONHAP]
Based on Kim's estimate of 1 trillion won in daily losses, Samsung Electronics’ semiconductor operations could lose about 41.6 billion won per hour.
Siemens estimated hourly losses from production stoppages at about $2.3 million in the automotive industry, $500,000 in oil and gas and $300,000 in heavy manufacturing in its “The True Cost of Downtime 2024” report.
Even brief shutdowns can severely disrupt semiconductor production because chipmaking involves hundreds of continuous steps that cannot stop once processing begins.
Samsung Electronics suffered losses of roughly 50 billion won during a power outage at its Pyeongtaek plant in 2018 even though the shutdown lasted only 28 minutes.
Most manufacturing industries can simply restart production lines after a stoppage, but semiconductor production differs because manufacturers often must discard entire wafers once processing halts.
“Semiconductors account for 36 percent of Korea’s exports, Samsung Electronics has 4.61 million retail shareholders and the company represents about 20 to 25 percent of Kospi market capitalization, so authorities need to consider the broader economic impact,” said Park Ji-soon, a professor at Korea University School of Law. “Those factors could justify the government stepping in with emergency mediation as soon as a strike begins.”
At the center of the dispute lies the union’s demand for a fixed performance bonus tied to operating profit.
The union wants the company to allocate 15 percent of DS division operating profit to bonuses and remove the current cap on excess profit incentive bonuses, or OPI, which limits payouts to 50 percent of annual salary.
Samsung Electronics argues that a fixed profit-sharing formula would reduce management flexibility.
Leaders of the Samsung Electronics labor union attend a rally demanding higher bonuses at its computer chip complex in Pyeongtaek, Gyeonggi, on April 23. [AP/YONHAP]
“The Supreme Court has generally viewed performance bonuses not as fixed wages but as optional rewards based on company performance,” the head of a labor consulting firm said. “Going on strike to demand bonuses tied directly to operating profit could cross into management’s decision-making authority.
Business groups also worry that concessions by Samsung Electronics could encourage similar demands across major industries.
Similar profit-sharing demands have recently emerged at HD Hyundai Heavy Industries, Hyundai Motor Company, Samsung Biologics and Kakao.
Six major business organizations reportedly plan to release a joint statement urging the union to cancel the strike and calling on the government to invoke emergency arbitration powers.
Even if the government steps in, the conflict inside Samsung shows no sign of easing.
Choi Seung-ho, head of the cross-company labor union, released an audio recording on Friday that allegedly captured Kim Hyung-ro, Samsung’s lead negotiator and a vice president at the company, discussing annual operating profit projections below 200 trillion won.
“An executive with little understanding of the semiconductor business is downplaying profits that could reach 300 trillion won,” Choi said.
Internal divisions among workers have also intensified.
Union members in the company's DX division, which oversees consumer electronics and mobile businesses, have criticized the semiconductor-focused union structure and filed for an injunction seeking to halt negotiations.
Members of the Samsung Electronics labor union shout slogans during a rally demanding higher bonuses at its computer chip complex in Pyeongtaek, Gyeonggi, on April 23. [AP/YONHAP]
One senior executive at a major conglomerate warned that the dispute could reshape compensation systems across Korea’s corporate sector.
“If companies begin distributing profits from temporary industry booms through fixed formulas, compensation systems across industries and job sectors could start to break down,” the executive said. “Samsung’s crisis is not just one company’s problem, but a complex issue for the entire industry.
“If companies set pay based only on large semiconductor firms and ignore differences in productivity, competition and market conditions, it will only increase social frustration and conflict.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
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