Samsung Chip Workers Strike Could Cost Up to $11.7 Billion

Workers at a Samsung chip factory have been on strike over issues related to unpaid overtime and bonus payments. Estimates cited by the Financial Times suggest a full-scale strike lasting the planned duration could cost Samsung between $6.9 billion and $11.7 billion in direct costs.

However, Samsung Electronics management and employees in the company’s Memory division have reportedly made progress in negotiations over bonus payments and wages.

According to a report from the Herald, Samsung management has agreed to codify worker bonuses for three years before institutionalizing them permanently.

The negotiations follow protests in April when workers demanded bonuses equal to 15% of the semiconductor division’s operating profit. Union members also threatened an 18-day general strike beginning on May 21 if their demands were not addressed.

Earlier discussions reportedly brought both sides close to agreeing on a 13% operating profit bonus, although management resisted making the arrangement permanent.

Workers argued that Samsung’s bonuses remained significantly lower than those paid by rival SK hynix despite Samsung’s larger market position.

The union demanded a 15% bonus, annual wage increases, and removal of bonus caps. Samsung management reportedly countered with a 10% bonus and a 6.2% salary increase.

The latest proposal includes codifying the bonus structure for three years as negotiations continue ahead of the planned strike.

Despite the latest offer, union members reportedly described the proposal as divisive and urged workers to continue preparing for the strike.

According to the report, a 10% operating profit bonus would equal roughly 35 trillion Korean won ($23 billion) in payouts, compared with approximately 20 trillion won ($13 billion) paid by SK hynix.

Workers are also pushing for permanent institutionalization of the bonus system to ensure equal payouts across all business units and avoid future renegotiations within the memory division.

The report added that several brokerages lowered Samsung’s share price targets on May 7 due to concerns over the possible impact of bonus payments on operating profits. The union continues to demand a 15% profit based bonus structure.