SEOUL - Samsung Electronics Co., the world's largest memory chipmaker, and its largest labor union reached a last-minute wage agreement, easing concerns over potential damage to South Korea's export-driven economy and disruptions to the global supply chain.
Industry observers said the tentative agreement reflected a growing sense of urgency shared by both labor and management over the potentially severe economic impact a full-scale strike, initially scheduled for Thursday, could have had on the broader South Korean economy. Estimated losses were projected to reach as high as 100 trillion won (US$66.7 billion).
Labor and management had been deadlocked since late last year over performance-based bonuses tied to earnings from the tech giant's artificial intelligence (AI)-related semiconductor business amid an ongoing global memory chip boom.
Under the tentative agreement reached just an hour before the planned strike, Samsung will allocate a special semiconductor performance bonus equivalent to 10.5 percent of business performance earnings, without a cap.
The special bonuses will be paid partly in company stock over at least 10 years, based on targets for the chip division to achieve more than 200 trillion won in annual operating profit from 2026 to 2028 and 100 trillion won from 2029 to 2035.
Of the total bonus pool, 40 percent will be allocated to the division as a whole, while 60 percent will be distributed to individual business units. A decision on how to divide the pool among loss-making divisions -- one of the most contentious issues during negotiations -- was postponed for one year.
Based on forecasts that Samsung's operating profit could reach 300 trillion won this year, the agreement could translate into bonus payouts of up to 600 million won for each of the 28,000 employees in the chip division.
The planned 18-day strike by nearly 48,000 union members will be suspended, while the tentative agreement is put to a vote by members from Friday through May 27.
The deal came after days of government-mediated talks that had broken down multiple times.
On Wednesday morning, Choi Seung-ho, head of Samsung's largest union, said the walkout would proceed as scheduled after management rejected a proposal from government mediators that the union had already accepted.
The Seoul government appeared heavily invested in the outcome, with the presidential office expressing deep regret over the collapse of wage talks and bringing in the labor minister to personally mediate the final negotiations.
Such involvement underscores the importance of the semiconductor industry, as outbound chip shipments account for roughly 35 percent of South Korea's exports, fueled by growing investment in AI data centers.
In the first quarter of 2026, the country's exports reached a record $219.9 billion, with semiconductor shipments surging 139 percent from a year earlier to $78.5 billion, according to government data.
Others warned that a strike at Samsung Electronics, which accounts for about one-quarter of the benchmark Korea Composite Stock Price Index market capitalization, could accelerate declines in the stock index.
Global companies that rely on South Korea's semiconductor supply chain have also expressed concerns over potential supply disruptions.
Samsung accounts for roughly one-third of the global dynamic random-access memory (DRAM) market. DRAM chips, key components in laptops and smartphones, have become essential building blocks for AI data centers worldwide.
Samsung reclaimed the top spot in the global DRAM market in the fourth quarter of last year, driven by increased sales of high-bandwidth memory chips, according to market research firm TrendForce.
Industry estimates suggested that an 18-day strike could have reduced global DRAM supply by 3 to 4 percent and NAND flash supply by 2 to 3 percent, likely driving further price increases.
