TLDR
- Samsung stock surged more than 6% in Seoul after its labor union suspended an 18-day planned strike following a last-minute tentative wage deal.
- The provisional agreement includes a new performance bonus system for the chip division, linked to 10.5% of operating profits, paid in company stock.
- Bonus targets of 200 trillion won annually are set for 2026–2028, dropping to 100 trillion won from 2029–2035.
- Workers also secured an average wage increase of 6.2% for 2026, along with improved child support payments and housing loan benefits.
- All union members will vote on the agreement between May 22 and May 27, with South Korea’s labor minister cautioning there is still a “long way to go before the final agreement.”
Samsung Electronics stock rose more than 6% in Seoul on Thursday, touching gains of up to 7.6% at its peak, after the company reached a last-minute tentative deal with its labor union late Wednesday, stopping a planned 18-day strike in its tracks.
Samsung Electronics Co., Ltd., SMSN.L
The work stoppage had been scheduled to run from May 21 to June 7. Just 90 minutes before midnight local time, following a final push by South Korea’s Labor Minister Kim Young-hoon, the two sides reached a provisional agreement.
Samsung’s stock also got a lift from a strong overnight earnings report by Nvidia, which posted revenue of $81.62 billion — up 85% year over year — boosting sentiment across semiconductor stocks globally.
The tentative deal centers on a new performance bonus structure tied to the profitability of Samsung’s chip division. Under the terms, workers will receive bonuses funded by 10.5% of operating profit, paid out in company stock rather than cash.
Employees can sell one-third of the stock immediately. The remaining two-thirds must be held for up to two years.
The bonus pool will be split 40% to the chip division level and 60% to individual business units. Profit targets of 200 trillion won per year have been set for 2026 to 2028, dropping to 100 trillion won from 2029 to 2035.
What the Union Was Asking For
The union had pushed for bonuses equal to 15% of operating profit, the removal of bonus payout caps, and a formalized bonus structure written into employment contracts.
They pointed to rival SK Hynix, which agreed last September to set aside 10% of its annual operating profit for worker bonuses. Samsung’s counter-proposal matched that 10% figure, with the chip division receiving an additional slice.
The union had previously accepted a proposal from government mediators that Samsung’s management rejected Wednesday morning, pushing the strike back to the brink.
South Korean Prime Minister Kim Min-seok had estimated the direct losses from an 18-day strike could reach 1 trillion won, with potential economic damage climbing as high as 100 trillion won if chip production disruptions forced Samsung to scrap wafers already in production.
What Comes Next
In addition to the bonus changes, Samsung agreed to an average wage increase of 6.2% for 2026, along with better child support payments and housing loans for workers.
The union confirmed the strike suspension and said all members will vote on the proposed agreement from May 22 to May 27. Labor Minister Kim emphasized this remains a provisional deal, calling the gap between the two sides “narrowed considerably” but cautioning that outstanding issues remain.
Samsung’s semiconductor arm posted a 48-fold jump in profit for the March quarter, and the company is on track to be among the world’s most profitable firms this year.
Ha SeokKeun, chief investment officer at Eugene Asset Management, said Samsung had become “undervalued relative to SK Hynix” due to strike concerns and expects “a strong rebound in Samsung’s share price.”
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