Samsung Electronics Co. has narrowly avoided a potentially disruptive strike this week after reaching a last-minute provisional agreement with the leadership of its largest labour union, pledging to share more of the windfall from the global artificial intelligence (AI) boom. However, the deal has exposed widening internal tensions over how the $1.1 trillion tech giant distributes its surging profits.
While employees in Samsung’s booming memory chip division could receive bonuses worth around 600 million won (about US$400,000), workers in its smartphone, television and home appliance businesses will receive about 6 million won. The roughly 100-fold gap has triggered significant backlash across the company, with growing accusations of inequity in performance-based compensation.
The dispute underscores deepening frustration among employees who argue they are not receiving a fair share of Samsung’s expanding profits, as the company positions itself to become one of the world’s most profitable technology firms by the end of the year. Samsung is the world’s largest supplier of memory chips, which are widely used in smartphones, electric vehicles and AI data centre infrastructure powering services such as ChatGPT and Claude.
Union leaders representing Samsung’s largest labour group — where chip division employees account for nearly 90% of members — have claimed a breakthrough in negotiations. The tentative agreement, reached just 90 minutes before a planned work stoppage, allocates 10.5% of operating profit as stock-based bonuses and an additional 1.5% in cash payments.
However, employees outside the semiconductor division say they have been structurally excluded from the benefits of the AI-driven boom. Some workers have reportedly worn black armbands, traditionally a symbol of mourning, in protest of the deal, according to JTBC News.
“Samsung Electronics is one company,” said Lee Ho-seo, head of a smaller union largely representing employees in the Digital Experience (DX) division.
“We work together and overcome crises together. But now, saying only the division that generated profits deserves bonuses makes no sense.”
For decades, Samsung’s DX division, anchored by its mobile phone business, has acted as a financial stabiliser for the broader company. During downturns in the semiconductor cycle, the division has absorbed losses driven by high fixed manufacturing costs and volatile memory pricing.
When the memory market faced a severe oversupply crisis in early 2023, the chip division reportedly borrowed 20 trillion won from Samsung’s display unit to sustain continued investment in fabrication facilities and research and development.
Profits from Samsung’s flagship Galaxy smartphone lineup have long helped fund semiconductor expansion even during periods of weak chip earnings, a strategy that ultimately positioned the company to benefit from the current AI-driven demand surge.
But since the provisional chip bonus agreement was announced, internal divisions have intensified. This week, the DX union filed a court petition seeking to block the larger chip-dominated union from leading labour negotiations, arguing that the agreement unfairly prioritises semiconductor workers.
The smaller union has also sought to invalidate the initial deal, claiming it disproportionately benefits the memory division at the expense of other business units.
Members of Samsung’s largest union are currently voting on the agreement, with ratification requiring a simple majority.
Samsung leadership has urged unity following the dispute. In an internal memo, Jun Young-hyun, chief executive of Samsung’s semiconductor business, called for an end to the conflict.
“If we can return to a foundation of mutual respect and trust, we can once again achieve a greater leap forward,” he wrote.
However, the bonus structure appears to have deepened divisions rather than resolved them. The smaller union reportedly grew from about 3,000 members before the proposal to nearly 13,000 by Friday afternoon, reflecting rising dissatisfaction.
Tensions have also emerged within the semiconductor division itself. Employees in loss-making units such as foundry and system LSI are expected to receive significantly smaller payouts than their counterparts in memory, based on performance allocation ratios. This has sparked complaints of unfair treatment among workers who say they provide essential technological support for Samsung’s flagship memory operations.
“Members of the Samsung family, we are one unit, one family,” Samsung Electronics Chairman Jay Y Lee said in rare public remarks during the dispute. However, internal message boards and online forums suggest widespread dissatisfaction remains.
“The deal forces us to ask: are memory workers receiving the largest share because they are exceptional, or simply because they happened to be in the right place during the AI revolution?” said Brandon Cho, chief executive of semiconductor design firm Semifive Inc.
