Shares Jump After Labor Breakthrough
Shares of Samsung Electronics climbed more than 6% on Thursday after its labor union suspended a planned 18-day strike, easing fears of major disruption at South Korea’s most important chipmaker.
The strike had been expected to proceed after government-mediated talks initially collapsed on Wednesday. However, a fresh round of negotiations led by South Korea’s labor and employment minister, Kim Young-hoon, produced a tentative agreement late Wednesday.
Union Members Will Vote On The Deal
Samsung’s labor union said the general strike has been suspended and that all union members will vote on the tentative wage agreement between May 22 and May 27.
Kim stressed that the deal remains provisional and that there is still a long way to go before a final agreement is reached. He said several issues remain unresolved, but the gap between the two sides has narrowed considerably.
Nvidia Results Boost Chip Sentiment
The rally in Samsung shares was also supported by broader optimism across semiconductor stocks after Nvidia reported another strong quarter overnight.
Nvidia’s revenue surged 85% year over year to 81.62 billion dollars, up from 44.06 billion dollars a year earlier. The results reinforced investor confidence in the artificial intelligence chip cycle and lifted sentiment across global semiconductor names.
Bonus Structure Remains Central
According to South Korean media outlet Yonhap, Samsung’s highly profitable chip division would receive 40% of the total bonus pool, while other business units would receive 60%.
A contentious decision over how to divide bonuses among Samsung’s loss-making divisions has reportedly been deferred for one year. That delay appears to have helped narrow differences between management and the union.
Special Bonuses And Profit Links
Reuters reported that Samsung would allocate a special bonus equal to 10.5% of operating profits to its chip division. The company also reportedly accepted union demands to link bonuses to operating profits and remove a bonus cap.
Yonhap also reported that Samsung would partially fund special bonuses with company stock over at least 10 years, depending on whether the chip division exceeds operating profit targets. The targets reportedly stand at 200 trillion won for 2026 to 2028 and 100 trillion won from 2029 to 2035.
Union Demands Were Higher
The union had previously sought performance bonuses equivalent to 15% of Samsung’s operating profit, along with the removal of bonus payout caps and a more formalized bonus structure.
The negotiations unfolded against the backdrop of competition from SK Hynix, which agreed last September to set aside 10% of operating profit as worker bonuses. That agreement increased pressure on Samsung to improve its own compensation framework.
A Strike Could Have Hit South Korea Hard
South Korean officials warned that a prolonged strike could have carried major economic consequences. Prime Minister Kim Min-seok estimated that direct losses from an 18-day strike could reach 1 trillion won.
He also warned that losses could rise dramatically if production disruptions forced Samsung to scrap semiconductor wafers already in process. Samsung Electronics accounts for 22.8% of South Korea’s exports, 26% of its total market capitalization and 12.5% of national GDP. For investors, the suspended strike removes an immediate supply risk at a critical moment for the global chip market.
