Samsung, South Korea’s largest company and one of the world’s biggest semiconductor manufacturers, saw its market capitalization plunge by as much as 99.07 trillion won — approximately $66.18 billion — on Wednesday after talks between management and workers collapsed without an agreement.
The company’s shares dropped as much as 6.09% intraday from Tuesday’s closing price of 279,000 won, reflecting growing investor anxiety over the possibility of a prolonged labor crisis at one of the world’s most important chipmakers.
At the heart of the standoff is a widening dispute over worker compensation, particularly Samsung’s performance-based bonus system.
Samsung’s labor union, which represents tens of thousands of employees, has threatened to launch an 18-day strike beginning May 21 if management fails to meet its demands. More than 41,000 workers are expected to participate in the planned walkout, making it one of the largest labor actions in the company’s history.
The strike threat follows a massive rally held on April 23, where roughly 40,000 workers gathered to pressure Samsung management during negotiations.
Speaking to reporters on Wednesday, union representative Choi Seung-ho expressed disappointment over the stalled talks.
“I would like to express some regret that none of the agenda items requested by the union have been addressed,” Choi said.
The union is demanding sweeping changes to Samsung’s bonus structure, arguing that workers deserve a larger share of the company’s soaring profits following the recent rebound in the semiconductor industry.
According to reports, the union wants Samsung to allocate 15% of its operating profit to employee performance bonuses, remove limits placed on bonus payouts, and formally institutionalize the compensation formula so workers have greater transparency and consistency.
Samsung management reportedly countered with an offer to distribute 10% of operating profit as bonuses while also providing a one-time special compensation package, according to South Korea’s Yonhap News Agency.
The union, however, appears unwilling to compromise.
Labor leaders claim their April 23 protest already demonstrated the workers’ influence on Samsung’s operations. They alleged that participation in the rally caused foundry production to drop by 58% and memory chip production to decline by 18% on that single day.
The union further warned that a full-scale 18-day strike could inflict losses of up to 30 trillion won — nearly $20 billion — on Samsung.
The dispute has now drawn concern from the highest levels of South Korea’s government, reflecting Samsung’s enormous importance to the country’s economy.
South Korean Finance Minister Koo Yun Cheol publicly expressed concern after negotiations broke down, warning against any disruption to Samsung’s operations.
In a statement posted on X, Koo said the government “deeply regrets” the failure of labor and management to reach a resolution.
“Strikes must never happen under any circumstances,” Koo wrote.
He emphasized Samsung’s global significance and its impact on the national economy.
“Samsung Electronics is an important company that the world is watching,” he added. “Considering the current management situation and its impact on the national economy, both labor and management sides must continue to strive to achieve principled negotiations.”
Investor sentiment improved slightly later in the trading session after government officials intervened publicly.
Samsung shares recovered some of their earlier losses and eventually turned positive following remarks from South Korean Prime Minister Kim Min Seok, who instructed government agencies to closely monitor developments and provide “active assistance” aimed at preventing a strike.
The timing of the labor dispute is particularly significant because Samsung has recently returned to strong profitability after a difficult downturn in the global semiconductor market.
In April, Samsung Electronics reported a dramatic rebound in first-quarter earnings, driven largely by explosive growth in its chip division amid recovering global demand for semiconductors and artificial intelligence-related hardware.
The company announced first-quarter operating profits of 57.2 trillion won, representing an extraordinary 750% increase compared with the same period last year.
That sharp recovery has strengthened the union’s argument that workers deserve significantly higher compensation after helping the company navigate one of the toughest periods in the semiconductor industry.
The outcome of the negotiations is now being closely watched not only by investors and employees, but also by governments and global technology companies that depend heavily on Samsung’s semiconductor supply chain.
A prolonged strike could potentially disrupt production of memory chips, foundry operations and critical components used in smartphones, servers, artificial intelligence systems and consumer electronics worldwide.
For now, pressure is mounting on both sides to return to the negotiating table before the planned May 21 strike date arrives.