Samsung and Union Negotiate 15 Hours Without Result, Final Push Wednesday Morning

TradingKey - South Korea's National Labor Relations Commission stated that Samsung Electronics and its South Korean labor union held nearly 15 hours of negotiations but failed to reach an agreement. Both parties will resume talks on Wednesday morning, with only one day remaining before the union's scheduled strike.

Commission Chairman Park Soo-keun revealed at a press conference late Tuesday night that both sides are moving toward an agreement, though a consensus on one key issue remains elusive. He did not disclose the specifics of the issue, stating only that "there is a disagreement between management and the union on one matter."

According to sources, the core of the dispute lies in whether performance bonuses should be capped at "50% of annual salary." The union advocates for abolishing the cap, demanding that bonuses be fully tied to the semiconductor division's profitability. Conversely, management insists on maintaining the cap, fearing that an uncapped bonus system would create fixed cost pressures during industry downturns.

Aside from this core obstacle, the two sides have largely reached a consensus on other issues, including the ratio of bonuses to operating profit and a 7% increase in base salary.

Tuesday's negotiations were originally scheduled to end at 7:00 PM but actually lasted until 12:30 AM on Wednesday. The parties plan to restart talks at 10:00 AM local time on Wednesday. Park Soo-keun expects the negotiations could conclude that morning, as the union needs to allow time for members to vote on any preliminary agreement.

The union had previously announced that if negotiations fail, it will launch an 18-day general strike starting May 21. This means the talks on Wednesday morning are the final window to avert the strike. Final news is expected around noon today.

Regarding market reaction, Samsung Electronics' share price tumbled more than 5% on Tuesday before recovering losses following news that the two sides were narrowing their differences. The stock briefly turned positive in the afternoon but closed down slightly by 1.96%.

As of 10:20 AM Seoul time on May 20, Samsung's stock price stood at 276,000 KRW.

[Source: Yahoo Finance]

KB Securities analyst Kim Dong-won noted, "Investors are most concerned about the shutdown of HBM and DDR5 production lines and the subsequent ripple effects." If the 18-day strike proceeds, the impact will be even more profound, and any signs of a breakdown in negotiations could trigger another sell-off.

The South Korean government has repeatedly pressured both sides, warning that if a strike causes significant damage to the national economy, it will invoke "emergency adjustment power," a mechanism that can halt a strike for 30 days during government mediation.

Furthermore, the Suwon District Court previously approved Samsung Electronics' application for a provisional injunction. The court required that production facilities must remain operational even if a strike occurs; violators will face a fine of 100 million KRW per occurrence per day.