Samsung Electronics’ labor union said Wednesday it will hold off on launching a planned strike after reaching a last-minute wage deal with management that will be put to a vote by union members later this month. The decision postpones an 18-day walkout that union leader Choi Seung-ho had earlier said would start Thursday, easing immediate concerns about how operations at the world’s largest memory-chip maker could be affected.
Choi said the union agreed not to proceed with the strike and that members will cast votes on the tentative agreement from May 22 to May 27. He made the announcement during a televised briefing and said the union wants to apologize for concerns its internal labor conflict had raised, adding that the agreement resulted from an all-out struggle that had stretched for about six months.
The sudden turn came after government-mediated negotiations between the union and management, according to the report. The talks focused on how much bonus payouts employees should receive in light of soaring profits tied to a global boom in artificial intelligence-related demand for memory chips.
Yeo Myounggoo, a senior Samsung official and Choi’s negotiating partner, said during the same televised briefing that the company hopes the agreement can serve as a starting point for more stable relations with the union. Yeo said the company will “faithfully implement the terms of this agreement” and will make its utmost efforts to promote labor-management cooperation.
The labor dispute had escalated into a broader national concern, with government officials previously threatening to invoke rarely used emergency powers to force a settlement at Samsung. The concern was that a work stoppage at the chipmaker could rattle global semiconductor supplies and weigh on South Korea’s trade-dependent economy, the report said. The union represents more than 70,000 workers.
Before Wednesday’s announcement, the union and management traded blame after earlier talks ended without agreement, the report said. Choi accused management of refusing to accept a government-mediated proposal, while management accused the union of seeking compensation packages that it said were excessive for units that Samsung described as loss-making.
The wage standoff reflected the way chip profits have surged this year, driven by demand that analysts have linked to artificial intelligence. Samsung said its operating profit jumped eightfold to a record 57.2 trillion won for the January-March quarter, and the report said both sides tied the negotiation to profit levels and future investment needs.
Union leaders had demanded a compensation structure in which Samsung would commit to spend 15% of its annual operating profit on employee bonuses and scrap bonus caps set at 50% of annual salaries. Samsung argued the demands were excessive, citing what it described as the highly cyclical nature of the semiconductor business.
Samsung and the union did not immediately confirm the details of the tentative agreement. However, Yeo suggested the company had agreed to extend bonuses beyond Samsung’s lucrative memory division into less profitable units, saying the company needs to invest in the future of both its memory and foundry businesses and that engineers across semiconductor production were involved in discussions on how to better motivate them.
Prime Minister Kim Min-seok, South Korea’s No. 2 official after President Lee Jae Myung, said in a televised statement Sunday that the strike could cause up to 100 trillion won ($66 billion) in economic damage by disrupting Samsung’s complex semiconductor manufacturing processes. The report also said experts warned the planned strike could have major global effects because memory-market supply has been struggling to keep up with demand.
A local court earlier weighed in on the dispute as well. The report said a Suwon District Court partially granted Samsung’s request for an injunction against the planned strike, ordering that the union maintain certain staffing levels to prevent damage to facilities and ensure safe operations, and barring unionists from occupying key facilities and offices.