Samsung averts fallout with big bonuses, but controversy over AI gains simmers

Workers at Samsung Electronics’ semiconductor division have felt left behind in the global artificial intelligence boom for months.

The build-out of AI was in full swing, boosting demand for computer memory chips, an industry dominated by Samsung and another South Korean company, SK Hynix. Reflecting this new age of abundance, SK Hynix introduced new, cutting-edge benefits in 2025: 10 percent of operating profit was earmarked for employee bonuses. The caps on these bonuses have also been removed.

In recent days, Samsung’s largest labor union made a similar demand in its negotiations — that the company devote 15 percent of its operating profit to performance bonuses for the semiconductor division and that it remove the cap that limits individual bonuses.

Disagreements with the company brought the workers to the brink of a strike, which was averted on Wednesday evening after the intervention of government mediators.

Under the interim agreement, which lifted the bonus cap, Samsung is expected to earmark 10.5 percent of profits for bonuses. In the first three months of this year, the company’s profit soared to $39 billion. The union will vote on whether to finalize the deal next Wednesday.

While the deal eased the immediate crisis, the episode illustrated a question that is gaining urgency in the age of South Korea’s AI windfall: How should its profits be shared?

“South Korea has never experienced the level of sudden and unexpected wealth we are seeing in the current semiconductor supercycle,” said Yong Gu Suh, a business professor at Sookmyung Women’s University. “How we solve this problem will be a test of the sustainability of South Korean capitalism.”

As the largest employer in South Korea, Samsung Electronics is a key pillar of the country’s economy. Together with SK Hynix, it accounts for more than 40 percent of the total market capitalization of the Kospi, South Korea’s main stock index, while semiconductors make up about a third of South Korea’s total exports.

The work stoppage at Samsung could shake up the global AI supply chain, which requires more of the company’s chips. Samsung and SK Hynix are already two of the main bottlenecks in building AI because they have not been able to keep up with the growing demand.

Nevertheless, bullish investors have more than tripled the value of the Kospi since the start of 2025. Earlier this month, Samsung Electronics surpassed $1 trillion in market capitalization.

Despite the company being known for much of its history for smartphones and TVs, 94 percent of Samsung’s operating profit came from semiconductors in the first quarter of this year. This gave the union significant leverage, as most of its 70,000 members work in the division.

But even within this division, according to the company, not everyone contributed equally.

The division’s profitability is borne by its crown jewel, the memory unit that makes chips vital to AI. But the division also includes two units, one that designs logic chips and one that makes chips for other loss-making companies.

How much each unit deserves has become a key point of discussion. The union demanded that most of the bonus pot be split equally among workers in all three units – as well as among workers in roles that do not directly generate profits, such as research. Samsung said it would be “socially unacceptable” to reward lackluster performance.

In a statement on Wednesday, Samsung said the union’s proposal “directly contradicts the company’s core management principle that ‘rewards should follow performance.'” Last night the union agreed to back down to 40 percent.

Other fissures have opened outside the chip manufacturing division. With the union so focused on negotiations over how to divide things up at the semiconductor division, workers at the consumer electronics division accused union leadership of sidelining their interests. Many remember a time not so long ago when semiconductors were a loss-making business and smartphones and televisions were society’s lifelines.

Mr. Suh, the professor, said the Samsung Electronics union, which is also widely referred to as a “millennial and Generation Z” union, represents a new kind of labor movement coming out of the AI ​​era — younger and less ideological than its predecessors, more focused on making immediate wins than building broader worker solidarity.

This may ultimately threaten the bargaining power of the union. About 4,000 consumer electronics workers have reportedly left the union in the past month, many of them rallying around a smaller union that better represents their interests. The split is likely to accelerate if Wednesday’s tentative deal is finalized.

On Wednesday, President Lee Jae Myung, a pro-labor liberal, took aim at the union’s demands, calling them excessive.

“Labor rights are meant to protect workers as a socially vulnerable group, but there are also important principles of solidarity and responsibility that go with that,” he said. “They don’t grant the power to use collective action to secure the rights of a small group of people.”

Meaghan Tobin in Taipei, Taiwan and Jin Yu Young in Seoul contributed reporting.