Samsung labor union agrees to new compensation plan: $400,000 bonus per person!

Samsung Electronics’ labor and management sides, after months of negotiations, finally reached a milestone profit-sharing agreement. On Wednesday, May 27, the Samsung Electronics union approved a compensation agreement with 73.7% of votes in favor. According to the plan, around 78,000 employees in the semiconductor division will receive 10.5% of the company’s annual operating profit as a stock bonus, plus an additional 1.5% cash reward, with a duration of up to ten years. Based on KB Securities’ forecast for Samsung’s 2026 operating profit of 327 trillion won (approximately $217 billion), employees in the memory chip division are expected to receive an average bonus of about 600 million won (about $400,000). However, employees in non-chip divisions such as smartphones and home appliances can only receive about 6 million won (about $4,000) under the current bonus structure, which is nearly one-hundredth of the memory chip employees’ bonus. Following the announcement of the compensation agreement, Samsung Electronics’ stock price rose over 6% on the day. Voting Completed as Scheduled, Average Bonus of $400,000 for Memory Chip Division The union leading these negotiations (SELU) had 57,290 valid voting members, with an estimated 80% to 90% from the semiconductor department, fundamentally determining the outcome. The final vote passed with 73.7% support. The key clause of the agreement stipulates that 10.5% of the semiconductor division’s operating profit will be distributed in stock, with the attached condition that from 2026 to 2028, the division must achieve annual operating profit not less than 200 trillion won (about $132 billion), and from 2029 to 2035 not less than 100 trillion won (about $66 billion). Based on the forecast of Samsung’s 2026 operating profit of around 331 trillion won, the semiconductor employees’ company-wide average bonus will be about 509 million won (approximately $370,000). However, there are significant differences in bonus distribution among each business unit: - Memory chip division employees can receive about 600 million won per person, about $400,000; - Employees in loss-making wafer foundry and logic chip design (LSI) units are expected to receive about 150 million to 200 million won, about $100,000 to $130,000. About 40% of the bonus pool will be equally shared among semiconductor employees, while the remaining 60% will be distributed according to each business unit's performance. Before the agreement was formally approved, it faced a legal hurdle. According to The Korea Herald, five employees from Samsung’s Device Experience (DX) division filed for an injunction at Suwon District Court to stop the union’s vote, claiming the DX division was unfairly excluded from voting. The court dismissed the application on Tuesday, clearing the last obstacle for the vote. Non-Chip Employees: The Other Side Under the Same Roof The agreement essentially keeps conditions unchanged for employees in the Device Experience (DX) division, responsible for smartphones, TVs, and home appliances. The bonus is about 6 million won (around $4,000)—almost a hundred times less than memory chip employees. According to the Financial Times, sources say Samsung’s Device Experience division is under pressure from Chinese competitors, with profitability weakening, while rising chip procurement costs directly benefit the semiconductor division, creating a dilemma with pressure from both sides. The National Samsung Electronics Union (NSEU), representing all employees (about 20,000 members), opposed the proposal and participated in the vote against it. The union’s acting president, Woo Ha-kyung, publicly stated: “We acknowledge our failure to devise an effective and proactive strategy to prevent the DX division from being unfairly treated. When the semiconductor business was in difficulty, it was the smartphone and home appliance businesses that generated revenue and helped support the semiconductor division’s growth.” NSEU official Lee Ho-seok also stated that some foundry employees within the chip division are also dissatisfied with certain agreement terms. Shareholder Lawsuit Threat and Production Line Impact Legal risks have not disappeared. A group called "Korea Shareholder Action Headquarters," consisting of individual shareholders, has issued a legal warning, arguing that a profit-linked bonus scheme is essentially a company fund distribution and, according to Korean commercial law, must be approved by a shareholders' meeting. Last week, the group held a rally near Samsung Electronics chairman Lee Jae-yong’s residence in Seoul, claiming to use every available legal means to block the bonus distribution. The internal dissatisfaction caused by uneven bonus distribution has already had tangible effects on Samsung’s key business. Reportedly, the chip packaging division has deliberately slowed production, directly impacting the delivery schedule for high-bandwidth memory (HBM). In response, Samsung Electronics CEO Jeon Yong-hyun called on employees to put aside disputes and return to normal operations in an internal memo. Industry Background: Profit Struggle Amid AI Boom Behind this agreement is the prosperity cycle in the memory chip industry driven by AI demand. Recently, Samsung became the first Korean company with a market capitalization over $1 trillion. SK Hynix joined this milestone on Wednesday. US chipmaker Micron’s market cap also exceeded $1 trillion at Tuesday’s close. According to the Financial Times, the agreement closely resembles the one SK Hynix reached last year. SK Hynix workers were also promised 10% of operating profit as bonuses over the next ten years. Based on the projected operating profit of 250 trillion won, SK Hynix’s 35,000 employees are expected to receive an average bonus of 710 million won each. For Samsung, this agreement ends the threat of strikes and stabilizes its core semiconductor workforce. But the intensified internal conflicts and unresolved shareholder legal disputes are ongoing challenges for management in this profit-sharing struggle amid the AI boom. Risk Warning and Disclaimer The market has risks, and investments require caution. This article does not constitute individual investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article suit their particular circumstances. Investing based on this is at your own risk.