When a strike is about to happen, a certain kind of tension descends on a factory town; it’s a quiet that feels more like held breath than calm. That tension had been growing for months outside Samsung’s expansive semiconductor plant in Pyeongtaek. Hard hat workers passing through security gates, union banners prepared, and impatient negotiators behind closed doors. Last week, the results showed that 74% of the vote was in favor. The attack had begun. And for some reason, the issues worsened.
On paper, the agreement approved by Samsung’s two biggest unions on May 27 is a labor victory. Bonuses of up to $416,000 will be given to memory chip workers, who produce the high-bandwidth chips that are flooding AI data centers worldwide. A large portion of it was paid in stock. That kind of sum affects more than just a South Korean factory worker’s bank account. It transforms a person’s life. It is the second time a major South Korean company has made such a written commitment. The agreement requires that 10.5% of Samsung’s semiconductor division’s operating profit go directly toward special bonuses for chip staff.
However, it’s difficult to ignore how shaky the sense of relief that Samsung’s leadership is experiencing is. The disagreement that led to this agreement wasn’t unexpected. It stemmed from a particular, acute annoyance: Samsung intended to give its 27,000 memory chip employees significantly larger bonuses than the 23,000 workers producing less sophisticated chips, which are used in Nvidia systems, Tesla automobiles, and other products. The union made a straightforward case. Why should one group profit from a company-wide AI boom while others are left on the sidelines?
After five months of impasse, the government intervened to mediate, and the result was a compromise that, depending on who you ask, either prevented Samsung from going bankrupt or created a new one. South Korean business associations are shaken. Concern has been voiced by President Lee Jae Myung. A group of shareholders is now threatening legal action, claiming that rerouting operating profit before taxes, as opposed to after, deviates from accepted practices and may violate the Commercial Act. “Potentially invites legal scrutiny,” according to one scholar. That’s a cautious way of indicating that someone will most likely appear in court.
Approximately 25% of South Korea’s exports come from Samsung. At the worst possible time, when AI infrastructure spending is increasing and chip shortages are already driving up prices, an 18-day strike involving 48,000 workers would have sent shockwaves through the global chip supply. Indeed, the strike was prevented. However, the cost of preventing it might not be felt for some time.
The fact that the agreement has widened rather than healed internal divisions is what makes the situation feel especially unresolved. Bonuses for employees in Samsung’s consumer electronics division, which manufactures televisions and household appliances, will be much lower. The vote has already been blocked in court by a union that represents those workers. The challenge’s future is still unknown, but the symbolism is clear. Samsung did more than just divide employees from management. It might have caused employees to become divided from one another.
There’s a feeling that Samsung’s management anticipated this and signed nonetheless, figuring that a contained legal and cultural dispute was better than a physical shutdown. That’s probably the correct decision. However, as this develops, it’s important to keep in mind that businesses that manage labor well typically do so covertly, well in advance of a vote. Now, Samsung is carrying out the more difficult version of that task—publicly, costly, and under intense scrutiny.
Samsung’s windfall came from the AI boom. Additionally, it established the expectation that windfall would be distributed. Regardless of the outcome of the lawsuits, that tension is unlikely to go away.
