Hong Kong/Seoul
Samsung Electronics has change into one of the main beneficiaries of the international synthetic intelligence growth. Surging demand for semiconductors has turned South Korea’s largest company into a $1 trillion firm this 12 months, propelling Seoul’s inventory market to rank as the world’s sixth-largest.
But one section of the nation is sad with the outcome: Samsung workers. Tens of 1000’s of staff have threatened to strike, in an unprecedented walkout that will disrupt a essential supply of reminiscence chips at a time when the AI business is determined for extra.
Hours earlier than the strike was scheduled to begin Thursday, the workers’ unions introduced they’d reached a tentative cope with administration. While the settlement nonetheless requires a vote by union members, it marks an early win for Samsung staff, who had been demanding larger pay in mild of the firm’s document income.
The deal averted – for now – what can be the largest strike in the firm’s historical past, involving greater than 48,000 staff, or practically 40% of its Korean workforce, over 18 days. Most of the taking part staff work in reminiscence chips, crucial elements in AI {hardware} produced by tech giants Nvidia and AMD.
The prospect of a halt in manufacturing rattled each the South Korean authorities and the international tech business. Samsung’s income accounted for greater than 12% of South Korea’s GDP final 12 months. The firm can be one of the world’s three essential reminiscence chip makers at a time of acute shortages pushed by the largest knowledge heart buildout in historical past.
“Any disruption to Samsung’s semiconductor production would go far beyond losses for a single corporate group, leaving deep scars across the national economy,” South Korea’s Prime Minister Kim Min-seok stated on Sunday.
The preliminary victory for Samsung workers got here as the rise of AI threatens to upend tech jobs round the world. On Wednesday, Meta laid off or reassigned nearly 15,000 employees as half of its efforts to allocate extra assets to AI. Other corporations like LinkedIn, Amazon and Snap have additionally introduced job cuts and restructuring round AI this 12 months.
Last month, Samsung reported document quarterly income, which surged greater than 8.5 instances larger than the similar interval one 12 months in the past and surpassed working revenue for the entirety of 2025.
Now, its workers are looking for a bigger share of the income.
The unions have demanded that Samsung take away its cap on bonuses at 50% of annual pay, allocate 15% of annual working revenue to bonuses, and prolong these adjustments past this 12 months.
While Samsung’s chip manufacturing staff obtain some of the best salaries in the nation, workers have been galvanized by a bonus hole as compared with rival chipmaker SK Hynix, South Korea’s second-largest firm.
SK Hynix has additionally notched document income this 12 months. But its staff secured a new bonus construction in September that scrapped a cap limiting bonuses to 1,000% of base wage. SK Hynix now allocates 10% of annual working revenue to an worker bonuses pool.
Under the new pay construction, some SK Hynix staff are entitled to bonuses equal to almost 3,000% of their base wage in 2025, with the common annual bonus per worker reaching 700 million gained ($465,000).
“The semiconductor industry is now facing a war to secure global talent,” Samsung’s largest union stated in a assertion final month. “SK Hynix has already revised its compensation structure to retain talent, while foreign companies are luring our engineers with exceptional offers.”
As half of the tentative deal reached with Samsung’s unions on Wednesday, the firm agreed to scrap the present cap on bonuses and determined to allocate 10.5% of enterprise efficiency income as the funding supply.
“The agreement came later than expected,” Samsung stated in a Wednesday assertion. “We will work to build a more mature and constructive labor management relationship so that such a situation does not happen again.”
The dispute has sparked nationwide debate over wealth distribution as a result of of the monumental income Samsung and SK Hynix are producing.
Jo Geun-jun, head of a South Korean labor analysis and advocacy group Anyoneunion, stated the AI growth has created “an extreme form of hyper-polarization.”
“On one side of society, the number of workers without job security or labor protections continues to grow,” he stated. “On the other, permanently employed workers at major conglomerates are enjoying unprecedented bonus payouts driven by booming corporate profits.”
The threats to strike got here simply as the semiconductor provide chain has come underneath distinctive stress. Global tech giants from Google to Amazon are scrambling for extra cutting-edge AI processors to increase knowledge facilities and practice next-generation AI fashions.
Once thought of a low-margin commodity, memory chips have change into indispensable in AI processors, facilitating speedy knowledge transfers and storage, stated Simon Woo, Asia Pacific tech analysis coordinator at Bank of America. The ensuing scarcity might persist into 2028, he added.
Research agency SemiAnalysis expects reminiscence chip costs to greater than double by the finish of this 12 months in contrast with 2025.
This places Samsung in a crucial place inside the international provide chain as one of the world’s three dominant reminiscence chip makers, alongside SK Hynix and US Micron Technology.
An extended-established participant in semiconductors, Samsung was initially slow to capitalize on the AI boom and lagged SK Hynix final 12 months as income fell. But it has since staged a restoration, pushed partially by never-ending demand for reminiscence chips.
In the AI reminiscence sector, SK Hynix leads with a 57% market share, adopted by Samsung’s 22% and Micron’s 21%, based on Counterpoint analysis knowledge from the fourth quarter of final 12 months.
For now, the tentative deal has lifted Samsung’s shares, although a strike might nonetheless happen if members of the union vote towards the short-term settlement.
“In an already supply constrained environment for memory, a disruption in one major memory supplier will certainly only have downside impact for the AI industry,” stated Ray Wang, a Seoul-based analyst at SemiAnalysis. “This could further worsen the shortage and potentially sustain the price hike momentum in the near term.”
Still, a strike shouldn’t be anticipated to convey manufacturing to a full halt. Samsung gained a minor victory on Monday, when a court docket granted an injunction ruling that workers concerned in security operations for chip manufacturing should keep a regular degree of staffing.