As Samsung Electronics' labor-management talks were halted again and the strike risk intensified, it emerged that the union declared a suspension of negotiations despite the company's "industry-best compensation offer." The company proposed that if the Device Solutions (DS) institutional sector, which handles the semiconductor business, achieves No. 1 in the domestic industry, it would provide compensation exceeding the upper limit of the excess profit incentive (OPI) through special awards, but the union is said to be insisting on permanently abolishing the cap through a system change, delaying the talks.
According to the industry on the 30th, Samsung Electronics stated its position on the 2026 wage negotiation process through an in-house notice that day. Samsung Electronics said, "We proposed to the union a 'special award' that would guarantee a payout rate at or above the level of competitors for employees of the memory business unit if we become No. 1 in the domestic industry in sales and operating profit," and "We also promised to pay special awards if we achieve business results at the same level as this year going forward."
Samsung Electronics proposed that if this year's sales and operating profit achieve No. 1 in the domestic industry, the memory business unit would guarantee a performance bonus payout rate at or above competitors' levels, based on employees rated "Da." It also presented that for the System LSI and foundry (contract chip manufacturing) business units, which are expected to post losses this year, if business performance improves, it would pay an additional 25% on top of the 50% OPI for a maximum performance bonus of 75%.
OPI is Samsung Electronics' performance bonus system that pays up to 50% of an individual's annual salary once a year within a limit of 20% of excess profit when the affiliated business unit's performance exceeds the target set at the beginning of the year. According to the company's proposal, DS institutional sector employees would receive performance bonuses that exceed the 50% cap of the existing OPI system.
Samsung Electronics stressed that to guarantee payout rates above competitors, it would use 13% of operating profit as the performance bonus pool. The union demanded using 10% of operating profit, not the current economic value added (EVA), as the performance bonus pool, and the company argues its share exceeds that.
It is also seen as factoring in that, if 10% of operating profit is used as the performance bonus pool as at SK hynix, employees of the memory business unit, which has a larger headcount, could see a lower payout rate.
In addition, Samsung Electronics proposed a benefits package that includes a total 6.2% wage increase (4.1% base, 2.1% performance), the introduction of a housing stability support program of up to 500 million won per employee, higher congratulatory and condolence payments for childbirth, and higher salary caps by CL.
The 6.2% wage increase exceeds the recent three-year average increase of 4.8%. For the housing stability support program, employees can repay in installments over 10 years at an annual interest rate of 1.5%, reducing housing costs. For childbirth congratulatory payments, the company proposed expanding the existing 300,000 won, 500,000 won, and 1 million won to 1 million won, 2 million won, and 5 million won, up to five times higher.
Despite the company's proposal, the union's position is that the performance bonus cap must be permanently abolished by changing the system. The union declared a suspension of negotiations, asking to institutionalize a method that allocates the 10% operating profit pool in a "institutional sector 40%, business unit 60%" ratio, with loss-making business units receiving only 60% of the institutional sector payout rate.
If the system is changed to the union's business unit-by-business unit profit allocation method, employees of the System LSI and foundry business units, excluding the memory business unit, would receive lower performance bonuses than before. Samsung Electronics said, "If we apply the union's proposal to the 2025 OPI payout rates, the System LSI and foundry business unit rates drop from 47% to 11%."
A Samsung Electronics official said, "We presented conditions under which all employees could receive more benefits, but we could not reach an agreement with the union," adding, "We tried our best to find common ground, but we are very sorry the talks were suspended. We will continue to work to ensure the 2026 wage negotiations are concluded as soon as possible."