A major shock for Samsung.

Samsung's labor union and management failed to reach an agreement on wages and benefits. Photo: Bloomberg .

Samsung Electronics' labor union has reached a stalemate after several rounds of failed negotiations. Union leader Choi Seung-ho announced a full-scale strike would begin on May 21st, after Samsung's management rejected a mediation proposal from the union.

Immediately after the news, the market reacted. Samsung shares fell by as much as 4.4%, while the Kospi index lost 3%.

At the heart of the conflict is a disagreement over profit distribution. The union is demanding that Samsung abolish the current bonus cap, allocate 15% of operating profits to employees, and include this clause in formal contracts. Meanwhile, Samsung management is proposing 10% along with a one-time special compensation payment, but refuses to increase wages for employees in loss-making departments.

"Abandoning this principle has caused a negative domino effect on businesses and many other industries," Samsung said in an official statement.

Pressure from workers isn't limited to Samsung. On the same day, the union at Kakao also announced that some members had agreed to strike after wage negotiations failed. SK Hynix, Samsung's direct competitor last year, agreed to allocate 10% of its operating profit to a performance bonus fund, setting a new standard for workers.

Samsung is the world's largest chip supplier. Its chips are found in data center servers, smartphones, and electric vehicles. Any production disruption could have ripple effects across the entire global technology supply chain.

The timing of the dispute is also very sensitive. Samsung's semiconductor division just recorded a 48-fold increase in profits in the first quarter of 2026, thanks to booming demand for AI chips. This is why the workers believe their demands are entirely justified. The Bank of Korea estimates that the strike could reduce the country's GDP growth by up to 0.5 percentage points this year.

The dispute puts President Lee Jae Myung in a difficult position. He came to power on a platform of protecting workers, but a prolonged strike at Samsung could seriously damage the economy .

"We urge all parties to make efforts to reach an agreement, even before the deadline, given the potential impact on the South Korean economy," a spokesperson for the President's Office said.

Professor Kim Dae Jong of Sejong University believes that even if a strike were to begin, the government would intervene by invoking emergency labor laws to stop it due to the seriousness of the issue.