Samsung Electronics Faces Potential Strike as South Korea Debates AI Chip Profit Sharing

South Korea's two largest memory chip makers posted combined operating profits of 90 trillion won ($61 billion) last year amid surging demand for high-bandwidth memory chips used in artificial intelligence systems and data centers. Samsung Electronics, the world's largest memory chipmaker, reported operating profit of 43.6 trillion won for 2025 while its first-quarter 2026 operating profit rose more than eightfold to 57.23 trillion won.

The company and its labor union failed to reach a wage agreement Wednesday despite two days of government-mediated talks. The union is seeking performance-based bonuses equal to 15 percent of operating profit and the removal of caps on bonus payouts.

It has threatened to begin an 18-day strike on May 21 if the demands are not met. SK hynix accepted similar union demands last year, setting bonus payments at 10 percent of operating profits and eliminating the cap on such payments. The outcome has contributed to dissatisfaction among some Samsung Electronics workers who say the company has not sufficiently rewarded staff despite higher earnings and rising stock valuations.

The combined market capitalization of Samsung Electronics and SK hynix represents about 47 percent of the benchmark Korea Composite Stock Price Index. A prolonged work stoppage at Samsung Electronics could affect semiconductor production and the country's export performance. Some estimates have placed potential economic losses from a full strike above 40 trillion won.

The labor dispute has coincided with broader discussion about distributing gains from the AI-driven semiconductor expansion. On Tuesday, the presidential chief of staff for policy suggested using excess tax revenue from the semiconductor supercycle to fund public dividends supporting startup funding, pension programs and worker training.

"The fruits of the AI infrastructure era are not results generated by certain companies alone ... they were produced on a foundation that all the people have built together over half a century," the official wrote on Facebook. The comments led to declines in shares of Samsung Electronics and SK hynix that afternoon amid investor concern about possible government intervention or higher corporate taxes.

Opposition parties criticized the proposal. The leader of the main opposition People Power Party described it as an attempt to redistribute corporate profits in a manner akin to communism. The leader of the New Reform Party said it would impose broader social responsibility on companies beyond existing tax obligations and shareholder returns.

Labor Minister Kim Young-hoon said Monday that he hoped the Samsung Electronics situation would encourage wider discussion on profit distribution so labor-management relations could develop into mutually beneficial partnerships. The labor talks breakdown has drawn statements from government officials expressing regret and pledging efforts to avoid a strike.