Samsung faces historic strike as AI boom fuels worker revolt

15 May 2026 , 22:06

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An impending 18-day strike at South Korean chip giant Samsung, which has sparked concerns within the government, unsettled foreign investors, and endangered global supply chains, centers on a critical question: who should benefit from the gains of the AI boom?

Over 45,000 workers are threatening to launch the largest strike in the conglomerate’s history starting May 21, potentially decreasing the production of memory chips that are key components in AI data centers, smartphones, and laptops, as Samsung and its union grapple to reach an agreement over bonus payouts.

Samsung Electronics (005930.KS), opens new tab, which has reaped substantial profits from a global memory shortage, has proposed paying generous bonuses to employees. However, it intends to give 27,000 memory chip workers at least six times more than its employees in the logic chip design and manufacturing sectors.

The union contends that the company’s other 23,000 employees - who make AI chips for Tesla (TSLA.O), opens new tab, and Nvidia (NVDA.O), opens new tab - often work in the same facilities as their memory counterparts and should not be neglected, despite incurring billions in losses in recent years as the foundry business struggled.

Reuters reviewed hundreds of pages of transcripts covering Samsung internal wage negotiations and spoke with more than 10 workers, including union leaders and sources familiar with the discussions.

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They spoke of deep divisions, described employee departures, and revealed how this could trace and threaten Samsung’s unique goal to become the world’s only semiconductor company offering a "one-stop" shop that spans different types of chips and services, unlike more specialized competitors like Micron (MU.O), opens new tab, or TSMC (2330.TW), opens new tab.

The internal discussions highlighting friction between company divisions and employee departures have not been previously reported.

JPMorgan estimated the strike could impact Samsung’s operating profit by 21 trillion won to 31 trillion won ($14.08 billion to $20.79 billion), while sales losses could amount to around 4.5 trillion won.

Samsung’s Device Solutions Division encompasses three main businesses - memory, system LSI, and foundry - and the AI boom has rendered these divisions unevenly profitable. Samsung is the world’s top memory chipmaker by sales but also produces televisions and smartphones.

The issues are "partly self-inflicted by the company," Namuh Rhee, a Yonsei University professor and chairman of a Korean corporate governance group, commented on social media.

He stated that Samsung’s move to merge different businesses created a complex business structure that results in a valuation discount while causing conflicts of interest and limiting business opportunities. "Samsung must enable foundries to become self-reliant."

TALENT DRAIN THREAT

Discontent among Samsung workers grew last year after rival SK Hynix (000660.KS), opens new tab, removed its pay cap for 10 years. This led to bonuses over three times greater than those offered to Samsung employees, enticing some to switch companies.

In March, Samsung proposed that memory chip workers receive bonuses surpassing those of SK Hynix employees, at 607% of their annual salary, according to transcripts of its wage negotiations. The company’s memory and logic chip businesses previously followed the same bonus plan.

However, employees in other sectors primarily focused on logic chips, such as "base die," crucial components of AI chips, would receive bonuses of 50% to 100%, as per the documents.

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Union officials argued that such a significant disparity in bonuses would drive logic chip employees to leave for the memory sector or other companies, crippling it after Samsung Chairman Jay Y. Lee stated his aspiration to be the "clear No. 1" in the logic chip market by 2030.

"If the memory division receives 500 million won while the foundry division only gets 80 million won, what motivation would those employees have to continue working?" said union leader Choi Seung-ho during negotiations, according to the transcripts.

Some workers reported an ongoing exodus. A worker identifying himself by his surname, Lee, a foundry engineer in Pyeongtaek, said his team had significantly shrunk in recent years as some moved to Samsung’s memory division and SK Hynix.

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Two other employees, who chose to remain anonymous, stated many of their coworkers are currently applying for positions with SK Hynix and other companies. SK Hynix did not provide an immediate comment.

The union’s demands include requests for Samsung to abolish a bonus cap of 50% of annual salaries and allocate 15% of annual operating profit to a bonus pool distributed to workers.

Samsung negotiators assert that performance bonuses should be awarded based on merit.

"The logic chip business registered losses in the trillions of won, and honestly, if not for our company, they might have gone out of business or closed down," said Samsung executive and negotiator Kim Hyung-ro, according to the transcripts. "So, how can you justify awarding performance bonuses?"

"The company still believes in this business and continues to make consistent investments in facilities - and in reality, those investments are supported by funds from the memory business."

In a statement, Samsung noted, "the logic chip business is a strategically significant business in which we have continuously invested, guided by our long-term vision."

"Samsung Electronics will offer its employees the best compensation in the industry" with the latest proposal, it assured.

Samsung also warned that if the strike proceeds, failing to fulfill customer demands would result in "a complete loss of trust."

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Samsung’s top leadership, the South Korean government, and investors have expressed concerns about how the potential strike could jeopardize Samsung and influence the broader economy.

In an internal memo earlier this month, Samsung’s chairman cautioned that besides business disruptions, a strike could trigger capital outflows, reduce tax revenue, and weaken the won.

In late April, South Korean President Lee Jae Myung remarked that some unions were making excessive demands, a statement widely perceived as directed at Samsung’s unions.

The American Chamber of Commerce in Korea stated that labor uncertainty could impact confidence in Korea’s reputation as a reliable partner in global manufacturing and supply chains.

Analysts suggested other companies were observing the dispute as a potential barometer for labor-management relations.

"If Samsung sets a precedent in which union demands are enforced through a strike, companies might face a very unfavorable bargaining position in the future," Korea University law professor Park Ji-soon commented.

Reuters talked to protesters who claimed Samsung did not acknowledge its employees’ contributions to making it a world-leading company.

Lee, a chip researcher for 30 years, told Reuters at a rally of about 40,000 workers in late April that many of his colleagues had left for other companies, and he had applied to work at Micron.

"I attended to deepen my understanding of Samsung."