Key Points
- Samsung shares climbed more than 6% in Seoul trading after the company’s labor union halted an 18-day strike following a provisional wage agreement reached late Wednesday.
- The tentative deal introduces a performance-based bonus framework for chip division employees, allocating 10.5% of operating profits in company shares.
- Annual profit benchmarks are established at 200 trillion won for 2026–2028, declining to 100 trillion won for 2029–2035.
- Employees gained an average 6.2% wage hike for 2026, enhanced child support contributions, and improved housing loan provisions.
- Union members will cast votes on the proposed agreement from May 22 through May 27, though South Korea’s labor minister warns the deal remains preliminary.
Shares of Samsung Electronics climbed more than 6% during Thursday’s Seoul session, reaching intraday highs of 7.6%, following a provisional labor agreement struck late Wednesday that suspended a threatened 18-day work stoppage.
Samsung Electronics Co., Ltd., SMSN.L
The strike was set to commence May 21 and continue through June 7. With just 90 minutes remaining before the midnight deadline, negotiators reached a tentative accord after intervention by South Korea’s Labor Minister Kim Young-hoon during final negotiations.
Additional momentum came from robust quarterly results announced by Nvidia, which reported $81.62 billion in revenue — an 85% year-over-year increase — lifting semiconductor stocks worldwide.
The provisional agreement establishes a performance-linked bonus framework connected to Samsung’s chip business profitability. Workers will receive bonuses funded through 10.5% of operating profits, distributed as company shares instead of cash payments.
Workers may liquidate one-third of their stock allocation immediately, while the remaining two-thirds must remain held for a maximum of two years.
Bonus distribution will allocate 40% at the chip division level and 60% across individual business segments. Annual profit benchmarks are set at 200 trillion won from 2026 through 2028, then reduced to 100 trillion won from 2029 through 2035.
Union Demands and Negotiations
The union had sought bonuses equivalent to 15% of operating profit, elimination of bonus ceiling caps, and formal bonus structures incorporated into employment agreements.
Workers referenced competitor SK Hynix, which committed last September to allocate 10% of annual operating profit toward employee bonuses. Samsung’s response matched that 10% baseline, while providing the chip division with supplementary allocation.
The union had previously accepted a government mediator’s proposal that Samsung management rejected Wednesday morning, nearly triggering the scheduled work stoppage.
South Korean Prime Minister Kim Min-seok projected direct financial losses from an 18-day strike at approximately 1 trillion won, with broader economic impact potentially reaching 100 trillion won if production interruptions forced Samsung to discard wafers mid-manufacturing.
Next Steps in the Process
Beyond the bonus modifications, Samsung committed to an average 6.2% wage increase for 2026, enhanced child support benefits, and improved housing loan programs for employees.
The union verified the strike suspension and announced that all members will vote on the tentative agreement between May 22 and May 27. Labor Minister Kim stressed the preliminary nature of the deal, noting the positions have “narrowed considerably” while acknowledging unresolved matters persist.
Samsung’s chip division reported a 48-fold profit surge for the March quarter, positioning the company among the globe’s most profitable enterprises this year.
Ha SeokKeun, chief investment officer at Eugene Asset Management, stated Samsung had become “undervalued relative to SK Hynix” due to strike uncertainties and anticipates “a strong rebound in Samsung’s share price.”
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