Samsung's chip employees could earn tens of millions in bonuses, fueling labor cost concerns

Samsung Electronics reached a temporary agreement with its South Korean union in the early hours of Wednesday, successfully suspending the planned 18-day strike, which was scheduled to begin on May 21st. The company's stock price soared by about 9% in South Korea's Exchange on Thursday, but the market's focus quickly shifted from the "lifting of the work stoppage risk" to "how much will this bonus cost."

According to Bloomberg, based on proposed terms and 2026 operating profit forecasts, Samsung may allocate approximately 40 trillion won (about 26.6 billion U.S. dollars) in bonuses to employees in its chip division this year, averaging around 513 million won (about 340,000 U.S. dollars) per person. This figure far exceeds the average income level of Samsung employees in 2025, which was 158 million won, and was the key to both parties reaching a compromise at the last minute before the strike.

The bonuses for employees in the memory chip division are expected to be even higher. According to Reuters, citing union news, an employee with a base salary of 80 million won is expected to receive a bonus of about 626 million won (approximately 416,000 U.S. dollars) this year, most of which will be paid in shares. Estimations by media outlets such as Yonhap also indicate that individual bonuses for employees in the memory sector generally range around 600 million won.

Under the temporary agreement, Samsung agreed to allocate 10.5% of the chip division's operating profit as bonuses in shares, and pay 1.5% in cash bonuses (the union originally requested 15%). This bonus plan will last for 10 years, provided that the chip division achieves certain profit targets: annual operating profits exceeding 200 trillion won from 2026 to 2028, and over 100 trillion won from 2029 to 2035. Employees are expected to receive their first batch of bonuses in early 2027, with one-third of the shares being immediately sellable, and the rest being gradually unlocked over the following two years.

Despite the agreement, employees still express dissatisfaction with the bonus gap compared to their competitors, SK Hynix. Macquarie Securities, based on its earnings forecast for 2027, calculated that if SK Hynix's operating profit reaches 447 trillion won in 2027, with its labor agreement term of "10% of operating profit for employee dividends," the average bonus per person would be a staggering 1.29 billion won (equivalent to about 6.1 million Chinese yuan). SK Hynix responded cautiously, stating that "the final performance has not been determined, and the scale of bonuses cannot be predicted."

As HBM and high-end memory chips have become critical components in the expansion of AI data centers, the bargaining power of core technology talents has significantly increased. Barclays economist Bumki Son pointed out that competing compensation plans are reasonable in the context of Samsung and SK Hynix vying for global talent. However, he also warned that the rigidity of South Korea's labor market could turn such arrangements into "free options" for employees – enjoying high returns during upswings, while still receiving protection during downturns.

Ryu Young-ho, a senior analyst at NH Investment & Securities, however, stated that although the strike risk has been temporarily eliminated, the agreement is not entirely positive as it brings significantly higher labor costs.