Samsung Strike Suspended as Union Votes on AI Bonus Deal

BBC Business reported Thursday that Samsung Electronics narrowly avoided a major industrial walkout after its largest union agreed to pause strike action pending a member vote on a tentative pay settlement.

The union, covering roughly 48,000 employees, had been set to begin the strike Thursday. Voting on the proposed agreement runs from May 22 through May 27.

What the Samsung AI Bonus Fight Was Really About

The core dispute was how to divide profits from surging demand for AI memory chips. Samsung had proposed bonuses worth more than 600% of annual salary for its 27,000 memory chip workers. But the roughly 23,000 employees producing less advanced chips for firms like Tesla and Nvidia stood to receive far smaller payouts, between 50% and 100% of salary.

The union argued that tiered arrangement was unfair. It pushed for a full bonus cap removal and a dedicated profit-sharing pool worth 15% of annual operating income to be split across the broader workforce.

Samsung’s Samsung Electronics shares surged more than 6% on Thursday following the announcement. South Korea’s Kospi index climbed more than 7% on the same day.

Also Read: SK Hynix Reports Record Profit on AI Memory Chip Demand

The Competitive Pressure Behind the Dispute

Rival chipmaker SK Hynix scrapped its bonus cap entirely last year, a move that unlocked payouts more than three times higher than what Samsung workers were receiving at the time. Some Samsung staff defected to SK Hynix as a direct result.

Samsung is simultaneously battling intensifying competition from SK Hynix and Micron during a period of exceptional AI-driven chip demand. The broader Samsung Group represents around one-fifth of South Korea’s entire economic output, giving the dispute national significance well beyond a single company.

A South Korean court had already limited the union’s leverage by issuing an injunction requiring minimum staffing levels across safety, quality, and facilities functions. The union also faced fines of $74,000 per day for any breach.

Also Read: South Korea Economy Faces Headwinds From Trade Uncertainty

Background: Enormous Stakes for Global Supply Chains

JP Morgan had estimated a full strike could cut Samsung’s operating profit by between $14 billion and $20 billion. Samsung’s first-quarter operating profit had already jumped approximately 750% year-on-year. Its market valuation crossed $1 trillion in May on AI chip momentum.

The American Chamber of Commerce in Korea warned that sustained uncertainty could redirect manufacturing investment toward competing regional markets. The tentative deal has, for now, taken that risk off the table.

Read Next: What Rising AI Data Center Demand Means for Global Chip Makers