Samsung Electronics saw its shares jump over 6% after its labor union suspended an 18-day strike following the successful negotiation of a tentative wage agreement. This development significantly alleviates concerns about potential production disruptions at the crucial South Korean chipmaker. Union members are scheduled to vote on the provisional deal between May 22 and 27.
Shares of Samsung Electronics surged over 6% on Thursday following the suspension of an anticipated 18-day strike by its labor union. The halt, announced late Wednesday after a tentative wage agreement was reached, significantly eased concerns about potential disruptions at the world's leading memory chipmaker.
Members of the Samsung Electronics labour union rally outside the company's Pyeongtaek factory, April 23, 2026. (Jung Yeon-je | AFP | Getty Images)
The union had initially stated the strike would proceed after government-mediated talks collapsed earlier on Wednesday. However, a subsequent round of negotiations, steered by South Korea's Minister for Labor and Employment, Kim Young-hoon, successfully led to a provisional agreement.
Adding to the market's bullish sentiment, semiconductor stocks broadly saw gains after Nvidia reported another stellar quarter overnight, with its revenue skyrocketing by 85% to $81.62 billion from $44.06 billion a year prior, fueling optimism across the sector.
According to a union statement, the general strike has been suspended, with all union members slated to vote on the provisional wage agreement between May 22 and 27. Minister Kim Young-hoon, speaking during a briefing streamed by government broadcaster KTV, emphasized that while this is a significant step, it remains a "provisional agreement" and there is still "a long way to go before the final agreement."
He further elaborated that despite various outstanding issues, the disparity between the two parties had "narrowed considerably," noting the union's substantial concessions.
Reports from South Korean media outlet Yonhap indicate that the highly profitable chip division is set to receive 40% of the total bonus pool, while other business units will get 60%. A contentious decision regarding the distribution of bonuses among Samsung's loss-making divisions has been deferred for a year.
Reuters separately reported that Samsung agreed to allocate a special bonus equivalent to 10.5% of operating profits to its chip division. This move aligns with the union's demands to link bonuses directly to operating profits and to eliminate a previous bonus cap, as confirmed by a union negotiator and a document shared by the union.
Yonhap also revealed that Samsung plans to partially fund these special bonuses with company stock, distributed over at least 10 years. This is contingent on the chip division surpassing operating profit targets of 200 trillion won (approximately $133.65 billion) between 2026 and 2028. The target will then be lowered to 100 trillion won for the period from 2029 to 2035, according to the union document cited by Reuters.
The union's initial demands had included performance bonuses equivalent to 15% of Samsung's operating profit, the abolition of bonus payout caps, and the establishment of a formalized bonus structure.
In a comparative context, rival SK Hynix reached a wage deal last September that commits 10% of its operating profit as bonuses for its workforce.
The gravity of the situation prompted intervention from South Korean President Lee Jae Myung, who commented in a cabinet meeting on the importance of "appropriate limits" to unions securing interests, without directly naming Samsung. South Korean Prime Minister Kim Min-seok had estimated potential direct losses from an 18-day strike at 1 trillion won, with economic repercussions potentially soaring to 100 trillion won if chip production disruptions led to scrapping semiconductor wafers.
Highlighting the company's immense national importance, Samsung Electronics contributes 22.8% to South Korea's exports, commands 26% of its total market capitalization, and its revenue alone accounts for a staggering 12.5% of the country's GDP.
— Contributions by CNBC's Lisa Kim and Blair Baek.
