The labor union at Samsung Electronics is sticking to pushing ahead with a general strike. In response, not only the management of Samsung Electronics but even shareholders voiced concern. With conflicts erupting within the Samsung Electronics union over issues such as discrimination against the DX (finished goods) institutional sector, public opinion appears to be deteriorating quickly.
On the 7th, Samsung Electronics CEO and DS (semiconductor) institutional sector Vice Chairman Jun Young-hyun and DX institutional sector President Roh Tae-Moon each posted a message titled A message to all employees on their respective institutional sector intranet boards, urging, "Do your best in your roles so that future competitiveness is not lost."
The two executives said, "As negotiations drag on, we believe many of you are feeling concern and frustration," and added, "The company will continue discussions with an open attitude and work to find a path that employees can relate to." They went on, "In a grave global business environment, all executives will approach this with a sense of responsibility so as not to lose future competitiveness."
The two leaders stepped up to communicate directly to prevent the dispute over performance bonuses with the union from escalating into the extreme situation of a strike. Before Vice Chairman Jun and President Roh, on the 5th, Shin Je-yoon, chair of the board of Samsung Electronics, also expressed concern over the union strike. Posting on the intranet, he urged a solution through dialogue, saying, "If a strike becomes reality, both labor and management will lose their footing."
◇ "A corporations that holds the retirement pensions of 5 million people… The strike must be withdrawn"
Shareholders of Samsung Electronics also spoke up. The Korea Shareholder Activism Headquarters, a small shareholder group, held a press conference at the National Assembly Communication Center in Yeouido, Seoul, on the morning of the 7th, urging the withdrawal of the strike, saying, "A full-scale strike halting semiconductor production is an act that harms the national economy and shareholder value."
Min Gyeong-gwon, head of the Korea Shareholder Activism Headquarters, said, "Samsung Electronics is an infrastructure symbolizing Korea's core technological hegemony and a national corporations that holds the current assets and future retirement pensions of 5 million people," and added, "A full-scale strike halting production must be withdrawn for the survival of the country and the corporations." He also noted, "Semiconductor production lines are ultra-precise processes that must run flawlessly 365 days a year; even a single work stoppage would force tens of thousands of wafers to be scrapped," and warned, "If a full-scale strike is pushed through in the middle of the global semiconductor hegemony war, customer trust built up over decades could collapse."
The Samsung Electronics union is demanding uncapped performance bonuses funded by "15% of operating profit." Regarding this, Min said, "A demand for performance bonuses uniformly proportional to operating profit is a blatant violation of accounting common sense," and pointed out, "It is hard to accept the idea of excluding creditor interest, taxes, and shareholder dividends to let a specific group monopolize excess profits, and the performance bonus system should be maintained according to proven global standards such as the economic value added (EVA) formula."
Min said that if the union actually goes on strike, they will pursue legal action. He said, "We will file claims for damages against all union members who participated in the illegal strike based on the legal theory of third-party infringement of rights," and added, "We plan to file a derivative suit under the Commercial Act against management that infringed shareholders' legitimate rights to dividends."
Global investment bank (IB) Citigroup recently issued a report and lowered its target price for Samsung Electronics from 320,000 won to 300,000 won due to labor-management conflict. It said that if the strike intensifies, it will be unavoidable to set up large provisions for performance bonuses. Based on this, Citigroup cut its operating profit estimates for Samsung Electronics for this year and next by 10% and 11%, respectively, from previous levels.
◇ Labor-labor conflict chills public opinion
Conflicts are intensifying within the Samsung Electronics union. Because the call to raise performance bonuses is focused on the DS institutional sector and even mutual slander has emerged, there is talk inside that momentum to support the strike is weakening.
An employee of Samsung Electronics said, "I have supported industrial action out of a sense of 'relative deprivation' where compensation is lower than competitors," but added, "Recently, the union's demands are concentrated on strengthening compensation for the DS institutional sector, so even if management accepts the demands, it creates a structure where employees belonging to DX feel 'relative deprivation,' and internal dissatisfaction is rising."
The Samsung Electronics branch of the Samsung Group supra-enterprise labor union (supra-enterprise union), the National Samsung Electronics Labor Union (Jeonsamno), and the Samsung Electronics Labor Union Donghaeng (Donghaeng union) formed a joint bargaining group in Nov. last year and have been negotiating with management on the 2026 wage and collective agreement (wage and collective bargaining). Among them, the Donghaeng union sent an official letter to the two unions on the 4th, conveying its intention to no longer participate in the joint bargaining group. The reason was that "despite proposals and requests for agenda items for the rights and interests of all members, not just those in a specific field, there has been no response to date." The Donghaeng union, which has about 2,300 members, is composed of about 70% members belonging to the DX institutional sector, which handles businesses such as home appliances, smartphones, and TVs.
After negotiations broke down in Feb., the three unions formed a new joint struggle headquarters and held a strike vote, winning majority support. Accordingly, they have announced they will launch a general strike for 18 days starting on the 21st. With the Donghaeng union breaking away from this process, it is observed that labor-labor conflict between semiconductor and non-semiconductor sectors is gradually deepening.
Following its departure from the joint struggle headquarters, the Donghaeng union also demanded an official apology from the supra-enterprise union, which holds a majority. The Donghaeng union said, "In the past, the supra-enterprise union abused its authority as the majority union to deliberately ignore or exclude our union's opinions, and even continued disparagement that constitutes insult under Article 311 of the Criminal Act," adding, "This can only be interpreted as an intent to exclude and deny the very existence of our union, beyond mere labor-labor conflict."
The demands of the Samsung Electronics union can be summarized as "Compensate us like SK hynix." Kim Sang-bong, an economics professor at Hansung University, said, "SK hynix and Samsung Electronics are different cases," adding, "At SK hynix, performance bonuses are paid under a labor-management agreement, so if there is a basis in the agreement, it is possible to use 10% of operating profit as the source for performance bonuses. In contrast, the Samsung Electronics union is asking after the fact for items not in existing contracts or the performance bonus system, so it is hard to see that the company has an obligation to accept them."
Kim also said caution is needed regarding the method of allocating a fixed percentage of operating profit as performance bonuses. He said, "Even in the global semiconductor industry there are cases of paying incentives based on performance, but it is hard to say that a method of uniformly using 10% to 15% of operating profit as the source for performance bonuses is a universal standard." He added, "A corporations's operating profit does not arise solely from labor's contribution; it reflects equipment investment, research and development, capital input, and shareholder risk bearing together," and said, "Allocating a significant portion of operating profit to performance bonuses can conflict with the share for investors or shareholders and the company's capacity for reinvestment."