Samsung Strike Threat Looms as Pay Talks Collapse

Samsung Electronics and its South Korean labor union failed to reach a wage agreement after government-mediated talks collapsed, raising the specter of an 18-day strike starting May 21. The breakdown in negotiations comes as the union demands performance bonuses equivalent to 15% of operating profit, along with the removal of a cap on bonus pay currently set at 50% of annual base salary.

The company has offered to allocate 10% of operating profit to bonuses and provide a one-time special compensation package. However, union representative Choi Seung-ho said there is 'no reason to continue the dialogue without institutionalization and transparency,' referring to the union's demand for an overhaul of Samsung's bonus scheme.

According to Reuters, Finance Minister Koo Yun-cheol warned that a strike should be averted at all costs, as it would pose a significant risk to South Korea's economic growth, exports, and markets. Semiconductors accounted for 37% of South Korea's exports in April, up from 20% a year earlier.

Meanwhile, SK Hynix is on the verge of achieving a $1 trillion market value, driven by strong demand for artificial intelligence (AI). According to Reuters, SK Hynix shares have risen more than 200% this year. If SK Hynix joins Samsung above the trillion-dollar threshold, South Korea would become the first country outside the United States to have more than one trillion-dollar company.

The union has planned an 18-day strike from May 21 if its demands are not met. Choi Seung-ho said some 41,000 unionized workers have expressed their intention to take part in the general strike, with the number potentially rising to more than 50,000.

Samsung Electronics lost as much as $66 billion in market value on Wednesday due to fears of a potential strike. The company has said it would continue efforts to prevent a worst-case scenario through 'sincere dialogue' with the union.