By Hyunjoo Jin and Heekyong Yang
SEOUL, May 21 (Reuters) – The pay deal reached between Samsung Electronics and its union is being hailed as a win for the company which gained key concessions and averted a massive strike, as well as for its memory chip workers – some of whom will receive $416,000 bonuses.
Samsung’s shares surged 8.5% to a record high on Thursday after the planned 18-day strike by some 48,000 domestic workers was suspended. Union members will vote on the government-mediated agreement between May 22 and May 27. The union’s leader has said he expects it to be ratified.
Samsung workers had been furious about the large gap in bonuses with their peers at smaller rival SK Hynix which had beaten Samsung to the punch in delivering advanced AI chip units to Nvidia, bolstering its fortunes.
Despite intense pressure from workers to match or outdo SK Hynix, Samsung has delivered hefty bonuses without being as generous as its rival.
“Samsung did a better deal than SK Hynix in terms of costs,” said Park Jun-young, a former human resources official for Samsung’s chip division who now writes about the industry.
Calling the deal a victory for Samsung, he noted it had been less generous in per-person compensation, but added that the terms continue to put the conglomerate at risk of having talented workers poached by its rival.
SAMSUNG BONUSES SMALLER AND MOSTLY IN STOCK
Under the deal, all chip workers will receive 50% of their annual salary as a regular bonus in cash, according to the union. On top of that, Samsung will set aside 10.5% of operating profit for special bonuses which will take the form of stock.
Of those special bonuses, this year 40% will be distributed across its entire chip business and the rest used to reward memory chip unit employees.
A memory chip worker with a base salary of 80 million won, for example, is expected to receive a total bonus of around 626 million won or $416,000 this year, a union source said, declining to be identified.
That compares with bonuses of over 700 million won that SK Hynix employees are expected to earn if the firm achieves an annual profit of 250 trillion won this year, according to Reuters calculations.
In contrast to Samsung, SK Hynix workers can receive their bonuses in either cash or stock, a source with direct knowledge of the compensation plan has said.
Samsung’s arrangement “avoids direct cash outflows while also helping support its share price without causing additional dilution,” said Ryu Young-ho, a senior analyst at NH Investment & Securities.
Samsung’s special bonuses for chip workers, which will last for 10 years, are also conditional upon the company meeting profit milestones.
SK Hynix, by contrast, has not put in place similar conditions, analysts said, noting these conditions could help Samsung better manage costs during an industry downturn.
SK Hynix did not immediately respond to requests for comment on its pay structure.
JPMorgan estimated Samsung’s total performance pay for 2026 would amount to 12% of its operating profit. The union had sought 15%.
RELIEF AND DISGRUNTLEMENT
The deal sparked mostly relief across South Korea. Samsung accounts for about a quarter of the country’s exports and the planned strike was expected to inflict significant damage to the economy and dent global chip supply if it went ahead.
The dispute has, however, exposed deep divisions over how the spoils of the AI boom should be shared.
And those spoils are nothing to be sneezed at, with Samsung’s shares having surged more than five times over the past year as memory chips became essential building blocks for AI data centres.
Although memory chip workers will gain huge bonuses, employees in Samsung’s other chip divisions will receive much less.
On Thursday, at Samsung’s sprawling chip complex southwest of Seoul, not everyone was happy.
“Internally, the memory business seems to be ok with the deal, but the rest of the teams don’t seem happy about it. It looks like the people who want out are already leaving,” a foundry engineer said, declining to be named.
A small group of individual shareholders also announced that they would sue if the deal was ratified, arguing that parts of the agreement were unlawful unless they were approved by shareholders.
(Reporting by Hyunjoo Jin and Heekyong Yang; Additional reporting by Kyu-seok Shim in Pyeongtaek; Editing by Miyoung Kim and Edwina Gibbs)
