The Tamesis
Samsung shares rose on Thursday after South Korea’s chip giant reached a trade deal with its largest union, representing tens of thousands of workers.
The deal, which averted a major strike, is not entirely certain as a group of Samsung Electronics shareholders vowed to launch legal action over the move.
But some investors apparently believe a last-minute deal on bonuses has a good chance of success when union members vote on the proposal in the coming days. Some workers can receive bonuses exceeding $400,000.
SEE ALSO: Alibaba unveils new AI chips, while Nvidia remains excluded
The rise also suggested that plans for an 18-day strike had been shelved, a sign that the company’s negotiators appeared to have reached an agreement, which was somewhat encouraging. Better than the deal struck by rival SK Hynix.
The dispute comes amid a global boom in artificial intelligence that has boosted Samsung’s business while boosting national economic growth and stock markets.
About 50,500 workers are preparing to leave production lines amid anger over how the company distributes its huge profits.
Under a tentative agreement between Samsung and its union, wages will rise and a portion of special bonuses will be paid in company stock over 10 years.
This is conditional on the chip unit achieving annual operating profits of more than 200 trillion won ($130 billion) between 2026 and 2028, and then reaching 100 trillion won by 2035.
Shareholder group Korea Shareholders Action Headquarters held a rally on Thursday near the home of Samsung Electronics Chairman Lee Jae-yong to protest the deal.
They said talks on bonuses tied to operating profits were not approved in a shareholder resolution and therefore had no “legal effect” under current commercial law.
The group vowed to “use all available legal means” to “prevent any company from disbursing funds under the deal” if a deal is struck by “bypassing” these necessary procedures.
Profits soar
Samsung’s memory chips are used in everything from consumer electronics to computer processors, and its next-generation high-bandwidth models are used to scale up artificial intelligence data centers.
Samsung said in April that its first-quarter operating profit soared about 750% year-on-year, while its market value exceeded $1 trillion for the first time this month.
The prospect of a strike has raised concerns about the economic impact in South Korea, where semiconductors account for about 35% of exports.
The union said on Wednesday that all of its members, some 70,000 employees, will take part in a vote on the tentative deal that will take place between Saturday (May 23) and next Thursday (May 28).
The government welcomed the outcome of last-hour negotiations mediated by the Labor Minister.
The tentative agreement introduces a new bonus pool for chip unit employees, equal to 10.5% of the unit’s performance, with no payout cap.
Of the total bonus, 40% will be distributed to the entire department and 60% will be distributed based on the performance of each business unit.
The union argued that workers at rival South Korean chip giant SK Hynix received more than three times the bonus as Samsung last year.
Union lawyers say Samsung is losing talent to rivals and union membership is growing due to what employees say is a “lack of transparency” in the bonus system.
Samsung shares surged on Thursday, rising 8.2% in afternoon trading in Seoul.
- AFP reporter Jim Pollard
See also:
China consumer spending and factory output fall in April
Xi Jinping warns Taiwan could cause ‘conflict’ as Trump summit begins
China DeepSeek says new V4 AI model can run on Huawei chips
Chinese AI circuit board company raises US$2 billion, becomes Hong Kong listed company of the year
China’s top streaming site criticized for AI actor ‘database’
Bytedance’s viral video model shows China’s growing control over AI
New DeepSeek model delayed online to test China’s AI chip strength
Nexperia’s Chinese subsidiary’s chips “nearly fully localized”
China beats U.S. again in global patent battle, Huawei maintains lead
China now requires chipmakers to use at least 50% domestic equipment
China’s big technological secret: Dutch chip-making machine replicated in laboratory
The post Samsung shares rise on UnionPay deal, but legal test looms appeared first on FinanceAsia.
