Samsung Electronics (005930.KS) is on the verge of the largest general strike in its history after bonus renegotiations between labor and management collapsed. A halt at the country's largest semiconductor production base — chips accounted for 36.2% of Korea's exports on a cumulative basis through April this year — would slow growth and deliver a severe shock to the Korean stock market and regional economies.
On Tuesday, Samsung Electronics' labor and management declared their post-dispute mediation a failure at the Government Complex in Sejong, ending a 17-hour marathon bonus negotiation that began the previous day. Choi Seung-ho, chair of the Samsung Electronics branch of the Supra-Enterprise Union and the union's chief negotiator, declared the talks a failure, saying, "The mediation proposal actually went backwards."
Management said, "We deeply regret actions that cause great concern and anxiety to our employees, shareholders, and the public," adding, "We will work until the last moment to prevent the worst-case scenario."
However, Choi claimed that "more than 50,000 members will participate" in the strike scheduled for the 21st, treating production disruptions as a foregone conclusion. If the union proceeds with a general strike, it would likely mark the first time Samsung Electronics' semiconductor production lines have halted in 42 years since the completion of the Giheung Campus in 1984. "We are not considering any additional dialogue with the company until the strike ends," Choi said.
If the general strike materializes, fatal damage is expected not only to Samsung Electronics but also to the national economy and financial markets. The union has warned that a general strike from the 21st through June 7 would cause approximately 30 trillion won in production losses. Additional damages worth tens of trillions of won could occur from the disposal of wafers — priced at $20,000 (about 30 million won) per sheet, with 660,000 sheets put into production monthly — and breakdowns of production equipment.
The union's core demands include setting the bonus pool at 15% of this year's projected operating profit (approximately 348 trillion won), including cash and stock compensation, and abolishing the cap on performance bonuses.
The government has stated it will do whatever it takes to prevent the Samsung Electronics strike. Prime Minister Kim Min-seok convened an emergency meeting of relevant ministers on the same day and said, "We will actively support dialogue between labor and management so that this does not lead to a strike under any circumstances." Some observers suggest the government could invoke emergency adjustment powers if Samsung Electronics goes on strike.
