Samsung could suffer over $20 billion in losses if labor strike happens

Samsung Electronics recently posted record-high profits of KRW 57.23 trillion (around $38.82 billion). However, the company is facing major challenges that could threaten its chip production, and it could suffer losses of over $20 billion due to a possible labor strike.

The company’s labor union has reiterated its demand that Samsung allocate 15% of its quarterly profits to workers.

After facing record losses over the past few quarters, Samsung posted record-high revenue and profit, thanks to its booming semiconductor chip business. Due to the ongoing AI boom, several major tech companies are purchasing large amounts of memory chips, leading to a global shortage. This has caused memory chip prices to rise sharply, helping Samsung achieve record profits.

The company’s workers now want a share of those profits. They are also demanding the removal of existing caps on performance bonuses and want an annual bonus structure instead of a one-time payout.

The labor union’s demand for a 15% share of the company’s quarterly profits translates to around KRW 40 trillion (approximately $27 billion) to KRW 45 trillion (approximately $31 billion), or roughly $400,000 per worker.

Samsung executives have reportedly offered to allocate 10% of profits to workers, which amounts to around KRW 27 trillion (approximately $18 billion) to KRW 30 trillion (approximately $21 billion).

Although negotiations between Samsung executives and the labor union have taken place, with South Korea’s Labor Minister Kim Young-hoon participating in discussions, the two sides haven't reached an agreement yet.

The labor union is threatening to begin a general strike on May 21 if its demands are not met. If that happens, Samsung could reportedly face losses ranging from KRW 30 trillion (approximately $20.3 billion) to KRW 40 trillion (approximately $28.7 billion) during the proposed 18-day strike.