Samsung Electronics has failed to reach a deal with its largest union, making a major industrial stoppage all but inevitable. Following the public announcement that talks had broken down, shares in the South Korean tech giant plunged 4.4%, dragging the broader Kospi index down 3%. Starting May 21, nearly 48,000 workers are set to walk off the job in an 18-day general strike.

The dispute, which has been simmering since late 2025, centres on bonus structures in Samsung's semiconductor division — the business unit generating outsized profits from surging AI-driven investment in data centres. Samsung proposed retaining the existing system, calculating the bonus pool at 10% of operating profit. The union demanded fixed payments equal to 15% of the semiconductor division's profit and the removal of all bonus caps. According to Yonhap, both sides did agree to scrap the existing ceiling that limited bonuses to 50% of annual salary — but Samsung flatly refused to extend incentive payments to loss-making divisions. "Accepting excessive union demands would undermine the fundamental principles of managing the company," Samsung said in a statement cited by Reuters.

Union leader Choe Seung-ho confirmed that management had rejected a settlement framework proposed by the Seoul government — one the union had been prepared to accept.

The potential fallout extends well beyond the company itself. Samsung accounts for roughly a third of the global DRAM memory chip market and a quarter of the high-bandwidth memory market — components that power everything from AI data centre servers to smartphones and electric vehicles. The timing is particularly damaging: the AI investment boom has already created a global shortage of these chips, and any disruption to Samsung's output will tighten supply further. Bloomberg warns the strike could also delay Samsung's production schedules and set back next-generation semiconductor development.

For South Korea as a whole, the stakes are significant. Samsung contributes nearly a quarter of the country's total exports. The Bank of Korea has estimated that the strike could shave 0.5 percentage points off national GDP growth this year.

The South Korean government had discussed invoking an arbitration mechanism that would legally freeze the strike for 30 days. On May 20, however, authorities said such a move would be premature, signalling that a negotiated resolution has not yet been ruled out.