Samsung Electronics, Union Resume Wage Talks Ahead of Strike Deadline

By Kim Han-joo

SEOUL, May 19 (Yonhap) -- Samsung Electronics Co. and its largest labor union resumed government-led wage mediation Tuesday, entering the final day of talks in a last-ditch effort to avert a strike at the world's largest memory chipmaker.

The two-day negotiations resumed days after the first round of mediation ended without a deal, as the two sides remained divided over performance-based bonuses ahead of an 18-day strike set to begin Thursday.

Labor and management remain sharply split over performance-based bonuses tied to earnings from the tech giant's artificial intelligence (AI)-related semiconductor business, amid an ongoing global memory supercycle.

Park Soo-keun, chairman of the National Labor Relations Commission, hinted at the possibility of reaching an agreement, saying the two sides were narrowing some differences during the previous day's negotiations.

"Ultimately, we will see whether the two parties can reach a settlement, and if not, we will issue a mediation proposal," Park told reporters before entering the meeting. "There is still a possibility of a deal, so we will wait and see."

The company has proposed maintaining the current excess profit incentive system while allowing the bonus pool to be calculated based on 10 percent of operating profit. It also proposed introducing a special compensation system, saying it would create a more flexible incentive structure.

In contrast, the union is demanding fixed performance bonuses equal to 15 percent of the semiconductor division's operating profit, along with the removal of payout caps.

The two sides also remain at odds over how performance bonuses should be distributed to other loss-making business units, industry sources said.

The union has reportedly proposed allocating 70 percent of the semiconductor bonus pool to be shared across the entire division, with the remaining 30 percent distributed based on business unit performance.

Management, however, reportedly argues the system would reward loss-making units and undermine performance-based incentives. It is instead pushing for a lower overall allocation rate to such payouts.

Samsung Electronics' chip division posted a record operating profit of 53.7 trillion won (US$35.8 billion) in the first quarter of this year. However, while the memory business is estimated to have been highly profitable, non-memory units likely posted losses.

Industry observers say a walkout could cost the South Korean economy up to 100 trillion won, given the country's heavy reliance on semiconductor exports.