Union leader Choi Seung-ho confirmed early Wednesday that negotiations had failed despite hours of government-mediated discussions held across Monday and Tuesday.
“I would like to express some regret that none of the agenda items requested by the union have been addressed,” Choi told reporters at about 3 a.m. local time.
The breakdown means more than 50,000 unionised workers are expected to proceed with a planned 18-day strike beginning May 21, a move that could significantly affect chip output at a time of intense global demand for AI-related semiconductors.
Core dispute: pay structure and bonuses
At the centre of the standoff is Samsung’s compensation system.
The union is demanding a major overhaul of how bonuses are calculated, including the removal of a cap that currently limits bonus payouts to 50% of annual base salary. Workers also want bonuses tied directly to operating profit.
Union representatives argue that the current structure fails to reflect the company’s strong financial performance amid the global AI boom.
The dispute has intensified comparisons with rival chipmaker SK Hynix, where workers reportedly benefit from a more generous bonus system after the company abolished its pay cap last year, resulting in payouts more than three times higher than those at Samsung.
That change contributed to a surge in union membership at Samsung, as employee frustration over pay disparities deepened.
Talks collapse after government mediation
The National Labor Relations Commission, which mediated the negotiations, said it presented multiple compromise options but ultimately ended the process.
It cited a “wide gap between the two sides’ positions” and the union’s request to suspend discussions.
Samsung itself did not immediately respond to requests for comment following the breakdown.
Union representatives said they currently have no plans to resume negotiations before the strike deadline, though they indicated they remain open to what they described as “a proper proposal” from management.
Stakes rise amid AI chip boom
The timing of the dispute is particularly sensitive for Samsung Electronics, which has been riding a wave of record profits driven by global demand for AI chips.
The company recently became only the second Asian firm, after TSMC, to surpass a $1 trillion market valuation — a milestone reflecting investor confidence in its semiconductor business.
However, labour tensions now threaten to disrupt that momentum at a critical moment for the global tech industry, where demand for high-bandwidth memory and AI-optimised chips continues to surge.
Employees have pointed to competitors’ gains, particularly in supplying memory chips used in AI systems like those powering large language models, as evidence that Samsung workers are not receiving a fair share of the company’s success.
Warning from leadership
Samsung’s board chair Shin Je-yoon warned that a prolonged strike could have far-reaching consequences, not just for the company but for South Korea’s broader economy.
He cautioned that production disruptions could weaken investor confidence and risk customer losses in an increasingly competitive global semiconductor market.
He said he was “worried about losing market leadership amid fleeing customers and falling competitiveness” if strikes disrupted production.
What happens next
If the strike proceeds as planned, it could become one of the largest labour actions in Samsung’s recent history, potentially affecting production lines tied to AI chips, memory products, and export supply chains.
With both sides currently entrenched, the coming days are expected to be critical in determining whether last-minute negotiations can prevent a prolonged shutdown — or whether the dispute escalates into a full-scale industrial disruption at one of the world’s most important semiconductor manufacturers.