For months, workers at the semiconductor division of Samsung Electronics felt left behind in the global artificial intelligence boom.
The A.I. build out was in full swing, driving up demand for computer memory chips, an industry dominated by Samsung and another South Korean company, SK Hynix. Reflecting this new age of plenty, SK Hynix had in 2025 unveiled new, industry-leading perks: 10 percent of operating profit was set aside for worker bonuses. Caps for those bonuses were also removed.
In recent days, Samsung’s largest labor union made a similar request in its negotiations — that the company commit 15 percent of its operating profit for performance bonuses for the semiconductor division, and to remove a cap that limits individual bonuses.
Disagreements with the company brought the workers to the brink of a strike, which was averted Wednesday night after an intervention by government mediators.
Under the provisional agreement, which abolished the bonus cap, Samsung is expected to set aside 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 by next Wednesday.
While the deal defused the immediate crisis, the episode illustrated a question taking on increasing urgency amid South Korea’s A.I. windfall: How should its profits be distributed?
“South Korea has never seen the level of sudden and unexpected wealth we’re 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 South Korean capitalism’s sustainability.”
As South Korea’s largest employer, Samsung Electronics is a critical pillar of the country’s economy. It and SK Hynix together account for over 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.
A work stoppage at Samsung could have rattled the global A.I. supply chain, which is demanding more of the company’s chips. Samsung and SK Hynix are already two of the main bottlenecks in the A.I. build-out, as they have not been able to keep up with increasing demand.
Nonetheless, bullish investors have driven up the value of the Kospi by more than threefold since early 2025. Earlier this month, Samsung Electronics crossed $1 trillion in market capitalization.
Despite the company being known for much of its history for smartphones and TVs, in the first quarter of this year, 94 percent of Samsung’s operating profit came from semiconductors. This has given the union significant leverage as most of its 70,000 members work in this division.
But even within this division, the company said, not everyone contributed equally.
Carrying the division’s profitability is its crown jewel, the memory unit, which makes the chips vital for A.I. But the division also includes two units, one that designs logic chips and one that makes chips for other companies, that are running losses.
How much each unit deserved became the core sticking point in the negotiations. The union requested that the majority of the bonus pot be equally distributed among workers in all three units — as well as those in roles that do not directly create profits, like 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 off to 40 percent.
Outside the chip-making division, other fissures have opened up. With so much of the union’s focus in the negotiations concerned with how to divvy things up in the semiconductor division, workers from the consumer electronics division have accused the union’s leadership of sidelining their interests. Many remember a not-so-distant time when semiconductors were a loss-making business, and smartphones and TVs were the company’s lifeline.
Mr. Suh, the professor, said that the Samsung Electronics union, which is also widely referred to as a “millennial and Gen. Z” union, represents a new species of labor movement native to the A.I. era — younger and less ideological than its predecessors, focused more on getting immediate wins than building broader worker solidarity.
In the end, this may threaten the union’s bargaining power. Over the last month, around 4,000 consumer electronics workers reportedly left the union, many of them rallying around a smaller union seen as better representing their interests. The splintering is likely to accelerate if Wednesday’s provisional agreement is finalized.
On Wednesday, President Lee Jae Myung, a pro-labor liberal, also took aim at the union’s demands, describing them as an overreach.
“Labor rights are meant to protect workers as a socially vulnerable group, but there are also the important principles of solidarity and responsibility that go along with it,” he said. “They do not 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.
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