Labor Negotiations Breakdown, Samsung Electronics Falls Nearly 6%

According to Reuters, Samsung Electronics and its South Korean labor union leaders stated on Wednesday that the company failed to reach an agreement with its South Korean labor union on compensation. Previously, the union had planned a long-term strike, which could potentially disrupt the production of artificial intelligence and other chips.

After several hours of marathon negotiations between the two parties on Monday and Tuesday, mediated by the government, union representative Choi Seung-ho said that the company did not respond to the union's demands for reforming the compensation plan, including canceling the current bonus cap set at 50% of the annual base salary, and instead calculating bonuses solely based on operating profit.

The union had previously stated that if their demands were not met, employees would go on strike for 18 days starting from May 21. The union representative indicated that there are currently no plans to resume negotiations with management before the strike date; however, he would be willing to consider it if the company proposes a "reasonable plan." The South Korean National Labor Relations Commission stated that it had proposed "various alternative plans," but decided to end the mediation process "given the wide gap in positions between the two sides and the union's request to suspend negotiations."

Samsung Electronics expressed deep regret in an email statement regarding the union's announcement of the breakdown in bonus distribution negotiations. The union's decision has caused great concern among shareholders and the people of South Korea. Samsung will make every effort to continue consultations with the union to avoid the situation from deteriorating to the worst-case scenario.

Additionally, South Korea's Finance Minister, Joo Ho-young, also expressed "deep regret" over the collapse of the negotiations. He wrote on social platform X: Strikes must be avoided at all costs, and added that the South Korean government will provide unwavering support from start to finish.

The news of this development led to a 6% drop in Samsung Electronics' share price that day.