Samsung Strike: Chip Manufacturing to Halt over Bonuses
A planned work stoppage at Samsung Electronics could restrict global access to memory chips.
Nearly 48,000 unionised workers at the company's South Korean facilities are scheduled to leave production lines on 21 May for 18 days.
The action could disrupt up to 4% of global DRAM supply. Samsung commands 36% of the worldwide DRAM market and produces high-bandwidth memory chips that power AI data centres.
The walkout affects 38% of the company's domestic workforce and represents the largest labour dispute in semiconductor industry history.
Bonus disputes
Workers at Samsung cite a widening pay gap between themselves and employees at SK Hynix, the world's second-largest memory chipmaker, as their reason to strike.
SK Hynix staff received performance bonuses more than three times higher than Samsung workers last year.
SK Hynix removed its 10-year cap on bonus pay in 2025 and allocated 10% of annual operating profit to performance bonuses.
Based on 2026 profit forecasts, this translates to average payouts between US$460,000 and US$477,000 per worker this year.
Samsung paid no performance bonuses in 2024 as its chip unit posted operating losses during the memory downturn.
The unit achieved a turnaround with Q1 2026 operating profit increasing nearly eightfold.
The National Union of Samsung Electronics wants the company to abolish its cap that limits bonuses to 50% of annual salaries.
The union also requests Samsung allocate 15% of annual operating profit to a bonus pool and make these changes binding beyond this year.
Samsung's action
Samsung management proposed a one-off bonus for memory chip workers exceeding levels SK Hynix workers receive this year.
The company refused to permanently abolish the 50% bonus cap in contracts, which remains the point of contention.
The planned strike will be larger and more damaging than the 2024 walkout, when about 6,000 workers left production lines for better pay and benefits.
Samsung's 24-hour chip factories in South Korea operate across three shifts in locations such as Pyeongtaek and Hwaseong.
A South Korean court partially granted a request from Samsung for an injunction, ruling that essential staffing levels must be maintained.
A minor one-day labour walkout in April showed what an extended strike could do to production.
Foundry output dropped 58% and memory fabrication fell 18% during that affected shift.
An 18-day shutdown could mean the company will have to scrap ultra-sensitive silicon wafers that cost US$20,000 each.
Supply shock could escalate prices
Samsung has begun warm-down procedures to scale back wafer inputs and protect machinery before Thursday.
The strike threatens to restrict memory chip supply at a time of shortages following the AI boom.
"If it is initiated on 21 May, it could disrupt global supplies of DRAM memory by 3% to 4% and NAND memory by 2% to 3%," Jeff Kim, analyst at KB Securities, explained to Reuters.
This supply shock could fuel further global tech price increases.
South Korean Government officials are pressing the union because Samsung accounts for nearly a quarter of exports from South Korea.
Industry Minister Kim Jung-kwan told parliament that all citizens are worried about the ripple effects.
The walkout could shave 0.5% points off a forecast 2.0% expansion in the South Korean economy this year, an anonymous official at the central bank says.
This assumes that around 30tn won, or US$19.9bn, of chip production could be lost.
Samsung faces the prospect of being overtaken by SK Hynix, which is approaching a US$1tn market cap.
