Written by: Xiao Bing, Shenchao TechFlow
Samsung Electronics' labor negotiations have finally reached the brink of a strike.
Late on May 12th, mediation led by Korea's National Labor Relations Commission broke down. Samsung Electronics Union President Choi Seung-ho told reporters as he left the meeting room, "There's no point in waiting any longer." Barring any unforeseen circumstances, starting May 21st, the union will launch a major 18-day strike, lasting until June 7th.
The union currently has about 74,750 members, with approximately 80% from the semiconductor division (DS). According to Choi, about 41,000 members have expressed willingness to participate in the strike, with the final number potentially exceeding 50,000. Considering Samsung's participation rates in labor actions over the past two years, industry analysts estimate the actual participation this time will be between 30,000 and 40,000, making it the largest labor action in Samsung's history. A one-day partial strike previously caused a 58% reduction in night shift production on some lines. If the full 18-day strike proceeds, TrendForce estimates it could affect 3-4% of global DRAM capacity and 2-3% of NAND capacity. JPMorgan estimates that based on the current disagreements, Samsung Electronics' annual operating profit could be reduced by over 40 trillion KRW.
The real story isn't the strike itself, but the proposal the union rejected.
A 13% Offer, No Deal
According to the UK's Financial Times, the two sides had recently narrowed their initial gap considerably. The union's initial demands were a 15% bonus pool from the semiconductor division's operating profit, removal of the 50% bonus cap, plus a 7% wage increase. Management's initial response was 10% plus some other benefits. After back-and-forth negotiations, it was rumored both sides were close to the 13% figure.
But talks stalled.
The union wanted the 13% written into the agreement, to be paid annually according to this formula. Management was willing to pay a lump sum at this ratio, but only for this year, translating to an average one-time bonus of about $340,000 per person based on current profit levels.
It doesn't sound that different, but the union rejected it.
For employees, the difference isn't complicated:
The logic of a one-time bonus is: the company made a lot this year, so we're giving you a bonus. Whether the company makes a lot next year, whether we give a bonus, and according to what formula, will be renegotiated every year.
The logic of annualized profit-sharing is: according to the agreement, a certain percentage of operating profit inherently belongs to employees. Employees receive it for as long as the AI boom lasts; if the boom fades, employees accept that.
Both models are "bonuses," but they correspond to different statuses. The former is a temporary gift from the company; the latter is a share that is institutionally allocated by rule. With similar amounts, the two arrangements mean either employees wait for management's decision every year, or they have a predictable rule written in black and white.
This is the core point the union won't let go.
SK Hynix Has Already Made This Work
The union's confidence comes from its neighbor.
In the second half of last year, SK Hynix reached an agreement with its union, abolishing the previous bonus cap and establishing a 10% annual operating profit pool for employee sharing, valid for the next ten years. In February 2026, SK Hynix issued the first bonus under this new mechanism, amounting to 2,964% of base salary, averaging nearly $100,000 per person.
SK Hynix's Q1 2026 operating profit surged more than 5 times year-over-year, with an operating margin of 72%, an extremely rare figure in the hardware industry. The reason is clear: it holds over 50% of the global HBM (High Bandwidth Memory) market, being the main supplier of HBM for Nvidia's H100 and H200 chips. It earns as much as AI data centers are built.
As profit expectations have been raised throughout the year, some Korean and foreign media have calculated, under optimistic scenarios, that the average SK Hynix employee bonus this year could be around $470,000; if the high-end profit forecasts from institutions like Macquarie for 2027 materialize, it could theoretically approach $900,000. These figures require caution; they are projections based on optimistic profit assumptions, not money already in hand. But even based on the already disbursed amount and conservative expectations for the second half, the absolute numbers still far exceed Samsung's current offer.
Since December last year, about 200 Samsung employees have jumped ship to SK Hynix, according to the Samsung union's own statistics. This is a very rare migration direction among engineers, as SK Hynix has been playing catch-up to Samsung for the past decade. But this time, with the bonus structure changed, people are following.
Samsung Management Finds It Hard to Compromise
From the outside, Samsung just seems stingy, but from management's perspective, it's more complex than it appears.
Samsung Electronics is not a pure-play memory chip company. It has multiple business lines: mobile phones, home appliances, display panels, foundry, memory, and more. The semiconductor division making a lot this year doesn't mean other divisions can enjoy the same cycle. In Q1, the DX division's operating profit was already declining. If semiconductors alone get a 15% written profit share, people within the group would immediately ask: why do they get a share, and we don't?
According to external analyst calculations, if Samsung Semiconductor truly allocated 15% of operating profit to employees, the corresponding bonus pool would reach 40 to 45 trillion KRW, an amount higher than SK Hynix's total annual operating profit. This isn't just the company being "reluctant," but such a large-scale fixed expense, once institutionalized, would be very difficult to roll back in the future.
What management is most unwilling to do is write "formulaic profit-sharing" into a contract. Once this precedent is set, next year the DX union, the display panel union, will all use the same logic to negotiate. The entire internal compensation order within the Samsung Group would be reshuffled, and labor contracts across the entire Korean chaebol system would be used as new references.
That's why Samsung would rather endure strike losses, be called "stingy" by the union and media, and hold its ground on the wording of "annualization."
This Won't Stop at Korea
The specific day the union and management reach a compromise isn't the most important thing in the long run.
What's important is: Scarce positions on the AI industrial chain have begun renegotiating their value.
Over the past thirty years, Silicon Valley's script has been to tie employees' fates to the company's stock price with equity incentives. But this script has two implicit premises: the company must go public, and employees must be part of the early batch. Engineers joining later, after stock dilution, get far less than those who came before.
SK Hynix has carved a second path: no need to wait for an IPO, no need to watch the stock price; use cash profit-sharing to turn employees into cycle partners. Its benefits are a transparent formula, a timetable, and predictability. The cost is the company needs to acknowledge that employees aren't just a cost item, but also part of the profit item.
Once this path is proven at SK Hynix, and some version is negotiated at Samsung, the next entities facing the same question might not just be Korean companies.
What do TSMC engineers think about how much Nvidia earns for every GPU sold? What do ASML workers think about the $200 million price tag of an EUV lithography machine? Will veterans in those age-old industries supplying liquid cooling, power, and transformers for data centers suddenly realize they hold scarce resources?
Not all questions will have immediate answers, but the questions have been asked.
The capital market has already provided one round of answers to "Who gets the AI红利?" in the past two years: Nvidia shareholders were the first to reap the红利, followed by TSMC, SK Hynix, and Samsung through capacity and pricing power—this is distribution among companies.
Distribution within companies has just begun.
The 18 days starting May 21st might end with a union victory, or with some compromise, where management concedes a step on "annualization," writing it into a shorter-term agreement to leave an escape route. The specific outcome affects this contract's amount, but not the real direction.
SK Hynix employees have already received their first profit-sharing ticket. Samsung employees are using a strike to fight for theirs. Who gets the next ticket, when, and in what form, might be one of the most interesting underlying trends to follow in the AI industrial chain over the next three to five years.
