Samsung Electronics Executive Vice President Yeo Myung-gu, left, and Samsung Electronics labor unions leader Choi Seung-ho sign a wage agreement – credit, Samsung, released
Following eye-watering Q1 performance, some 48,000 of Samsung’s semiconductor division workers are set to receive a new profit-sharing-style bonus structure that will give a bigger slice of the AI pie to those making baking it.
Samsung’s compensation package was among the country’s most generous, as the tech giant accounts for a staggering 16% of national GDP. But after last month’s Q1 revenues rose over 800%, exceeding the entirety of fiscal year 2025, 40% of Samsung’s South Korea-based staff were poised to go on strike for better terms.
The issue was resolved quickly and a preliminary agreement was reached between Samsung’s largest labor union and the company which saw the staff return to work Monday morning, and the company’s shares surge 7%.
Roughly 75% of the 62,000 unionized workers backed the preliminary deal that would see an end to the cap on bonuses of 50% of annual pay, and in its place the commitment to allocate 10.5% of operating profits from its semiconductor division to worker bonuses.
Well, the semiconductor division accounted for 94% of total operating profit in the quarter, amounting to $35.8 billion, 10.5% of which divided 48,000 striking workers would equate to around $78,000 for just this quarter alone. Multiplied by 4, a worker’s slice of the AI boom would amount to $312,000.
Samsung is the country’s largest company at over $1 trillion in market cap, and it’s also the largest semiconductor manufacturer. The standoff came 8 months after the second-largest semiconductor producer, SK Hynix, improved its own bonus terms to its employees.
“The semiconductor industry is now facing a war to secure global talent,” Samsung’s union said in a statement last month. “SK Hynix has already revised its compensation structure to retain talent, while foreign companies are luring our engineers with exceptional offers.”
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Samsung and SK Hynix are direct beneficiaries of the global AI boom (or bubble, as some might say), as the wafer-thin processors are needed to supply the computing power to run the AI tools which can be found all throughout our society from E-commerce to hospitals to the front lines of the war in Ukraine.
The strike threatened to so thoroughly derail global semiconductor production that the Korean Prime Minister Kim Min-seok made mention of it on Sunday.
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“Any disruption to Samsung’s semiconductor production would go far beyond losses for a single corporate group, leaving deep scars across the national economy,” said the Prime Minister, whose government actually helped step in and mediate the deal.
“The agreement came later than expected,” Samsung said in a Wednesday statement. “We will work to build a more mature and constructive labor management relationship so that such a situation does not happen again.”
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