Shares of Samsung Electronics dropped as much as 4.5% before recovering some losses to trade around -0.75% on Wednesday, following investor concerns over labor unrest at the company. The decline comes as over 47,000 employees, represented by the company’s union, prepare to strike on Thursday after negotiations with management on wage and bonus disputes ended without a resolution.
The negotiations broke down after Samsung Electronics decided against accepting a mediation plan proposed by South Korea’s National Labor Relations Commission, although the union had agreed to it. According to a union spokesperson, Samsung requested additional time for talks but had not provided a decision by Wednesday morning, which ultimately led to the breakdown.
Union leadership stated their disappointment at the collapse in discussions but confirmed that they remain willing to negotiate during the work stoppage. The current plan calls for an 18-day strike, while court restrictions prevent union members from disrupting key safety and production facilities.
Central to the union’s demands are changes to the bonus system, specifically the allocation of 15% of operating profit to performance bonuses, the elimination of payout caps, and formalizing bonus structures. Samsung maintains that granting these requests in full could compromise company management principles. The company also reiterated its openness to further dialogue and expressed opposition to industrial action under any circumstances.
The South Korean government, including President Lee Jae Myung and Prime Minister Kim Min-seok, had called for a resolution, with officials signaling that emergency measures to halt the strike could be used if necessary.
The labor minister has the authority to suspend strikes for up to 30 days in disputes deemed to endanger the economy, though as of Wednesday, the government still viewed intervention as premature and stressed the potential for renewed talks.
Samsung makes up nearly one-fourth of South Korea’s exports and is the largest global supplier of memory chips, with any production shortfall potentially exacerbating current supply challenges amid high demand from AI-related sectors. The dispute has raised concerns about possible disruptions to both South Korean economic performance and international technology supply chains.
