Samsung Electronics labor and management dramatically defused what would have been the biggest general strike crisis since the company's founding with just an hour and a half to spare. The worst-case scenario of a semiconductor production line shutdown was avoided, but some say the deal does not completely eliminate risk for Samsung Electronics. In particular, management is expected to shoulder a structural expense burden and investment rigidity for 10 years.
Samsung Electronics labor and management on the 20th held last-minute talks at the Gyeonggi Regional Employment and Labor Office in Suwon, Gyeonggi Province, unusually chaired directly by the Minister of the Ministry of Employment and Labor (MOEL), and succeeded in signing a tentative agreement about 1 hour and 30 minutes before the announced strike time.
The key sticking point between labor and management was how to distribute performance bonuses. The union had pushed for more than six months to institutionalize a fixed percentage of operating profit as performance pay and to remove the cap. Management had stuck to the existing economic value added (EVA)-based method, but just before the strike it accepted much of the union's core demands and reached a deal.
◇ Performance pay in company stock… positives in the labor-management deal
The crux of the tentative deal is to keep the existing performance incentive (OPI) while creating a "special management performance bonus" system for the DS (semiconductors) institutional sector. The funding pool, agreed by labor and management, is fixed at 10.5% of business performance for the next 10 years, with no cap. Base pay rises by a standard increase rate of 4.1% plus an average performance increase rate of 2.1%.
The immediate effect of the deal is clear. The worst-case scenario of a full shutdown of semiconductor production lines did not materialize. Samsung Electronics is currently mass-producing high-bandwidth memory (HBM), essential for artificial intelligence (AI) infrastructure, alongside cutting-edge DRAM. If production disruptions had occurred at this point, delivery commitments with global clients such as Nvidia and AMD could have been shaken, and the worst path could have seen volumes transfer to rival SK hynix.
It is also seen as meaningful in terms of talent retention. With this deal, DS institutional sector employees are projected to receive performance bonuses of up to 500 million–600 million won per person this year. By narrowing the treatment gap with SK hynix, which fiercely competes with Samsung Electronics in the HBM market, the move is expected to help stem the outflow of key engineers.
It is also positive that performance bonuses will be paid entirely in company stock. Among U.S. big tech companies and major semiconductor corporations, it is common to pay performance bonuses in company stock. With cash bonuses, the interests of the company and employees can loosen the moment they are paid, whereas company stock strengthens solidarity with the company. That is why Nvidia and Intel widely use RSUs (restricted stock units).
◇ Institutionalizing the performance-bonus pool for 10 years weighs on investment
On the other hand, from a mid- to long-term perspective, management has strapped on a heavy "sandbag." Many note that the deal places a structurally heavy load on management. The biggest burden is the "rigidity" of the performance bonus system. The deal applies for 10 years, from 2026 to 2035. While bonuses are paid if operating profit targets are met, the fact that the funding ratio (10.5%) and the system itself are fixed for 10 years constrains managerial flexibility.
Semiconductors are an industry where technological paradigms shift rapidly in three- to five-year cycles. Even if business structures change or new investments are needed in the meantime, a pre-set expense structure can become a drag. A semiconductor industry official said, "In a structure where 10.5% of business performance is fixed spending on performance bonuses, there is no issue when revenue is ample, but the story changes when the semiconductor cycle turns down," adding, "Even if sales and operating profit fall, the bonus ratio remains, and the resources that should go to research and development (R&D) and facility investment can shrink by that much."
The deficit business units issue is closer to a deferral than a solution. The foundry and system LSI units, which are expected to be in the red this year, will receive a certain level of compensation in 2026 from the performance-bonus pool of the profitable memory semiconductor unit. This dilutes the achievements of employees in the memory unit. Differential application to deficit units is set to begin in 2027, but unless the fundamental competitiveness issues of non-memory are resolved, structural tension is likely to recur.