By Kwanwoo Jun
Samsung Electronics' management and union leaders resumed wage talks on Monday in a last-ditch effort to avert a potentially disruptive strike at the world's largest memory-chip maker.
Both sides are under pressure to reach a deal after South Korea's government warned it could invoke emergency mediation powers to restrict the industrial action and force a settlement if negotiations fail. Talks are expected to continue through Tuesday.
At the crux of the dispute is how to distribute Samsung's booming earnings on strong chip demand amid the artificial-intelligence buildout. Both net and operating profits surged severalfold from a year earlier to record highs in the first quarter, with earnings expected to accelerate further this year.
Concerns over disruptions to Samsung's chip production eased later Monday after a local court partly granted the company's injunction request against the strike. The court ordered the union to maintain normal operations at certain key production facilities even during the industrial action, according to Samsung officals.
Shares in Samsung closed 3.9% higher on Monday, clawing back roughly half of their losses in the previous session amid concerns over labor unrest. The stock has still more than doubled so far this year.
Negotiators had failed to reach an agreement in previous talks over how Samsung's huge profits should be shared. The union demanded that the company allocate 15% of its annual operating profit to employee bonuses, but management rejected the call because it would exceed the company's bonus cap, currently set at 50% of annual salary. Union leaders also called for the cap to be removed, a demand company executives likewise turned down.
Unionized Samsung workers plan to strike from May 21 to June 7. The union said it will proceed with the walkout if no settlement is reached in government-mediated negotiations that resumed at the National Labor Relations Commission in Sejong, central South Korea, early Monday morning.
Both sides returned to the negotiating table, a day after South Korean Prime Minister Kim Min-seok warned that his government will pursue all options available to avoid a strike that could wreak havoc on the economy.
Samsung accounts for 22.8% of South Korea's total exports and 26% of the local stock market, Kim noted.
"If a situation arises where massive damage to the national economy is feared, the government will have no choice but to devise all possible response measures, including emergency mediation, to protect the national economy," the prime minister said at a news conference on Sunday.
Kim noted that a single day of suspended operations at the Samsung chip assembly lines could result in losses of up to 1 trillion won, equivalent to $667.6 million. Eeconomic damage could also balloon to as much as 100 trillion won if wafers have to be discarded because of the strike, he said.
On Saturday, Samsung Chairman Lee Jae-yong apologized for the labor unrest, saying it was causing anxiety and undermining trust among global customers. The Samsung chief called on all Samsung employees to "wisely join forces and move forward" to resolve the dispute.
"Unlike many other industries, the semiconductor industry is highly capital-intensive and requires processes to run 24 hours a day without interruption, so strikes must never occur," Samsung said in a separate statement.
In a post on X on Monday, South Korean President Lee Jae-myung said that "corporate management rights should be respected as much as labor rights" as the country embraces liberal democracy and a capitalist market system.
Write to Kwanwoo Jun at kwanwoo.jun@wsj.com
(END) Dow Jones Newswires
05-18-26 0528ET
