Samsung Electronics Shares Swing Billions on Failed Wage Talks and Strike Threat

Samsung Electronics shares swung sharply on Wednesday after its largest labor union said wage talks had broken down, triggering fears of a major strike later this month that could halt production at the world's largest memory chipmaker. The company lost as much as 99.07 trillion won ($66.18 billion) in market value intraday, a drop of 6.09 percent from the previous close.

Shares later reversed all losses and turned positive after government officials stepped in to urge both sides to resume dialogue and avert disruption. More than 41,000 unionized workers have signaled they will join an 18-day walkout scheduled to begin May 21.

The union first announced the strike plan at a rally on April 23 that drew 40,000 participants and already caused a 58 percent drop in foundry production and an 18 percent fall in memory output that day. The core dispute centers on how to distribute performance bonuses linked to record profits.

The union is seeking 15 percent of operating profit paid as bonuses, removal of payout caps, and formal institutionalization of the system. Management proposed 10 percent of operating profit for bonuses plus a one-time special compensation package it described as exceeding industry standards.

"I would like to express some regret that none of the agenda items requested by the union have been addressed," the union representative told reporters after the talks ended. The union added that the number of participating workers could rise above 50,000.

Korean officials expressed deep regret over the collapse of two days of government-led mediation and warned that strikes must be avoided. One minister described Samsung Electronics as an important company that the world is watching and called on both labor and management to strive for principled negotiations given the impact on the national economy.

The prime minister instructed the government to manage the situation closely and provide active assistance to prevent a strike. Shares recovered after these public statements, erasing the earlier intraday losses. The company said it regretted the suspension of the mediation process arranged by the government but pledged to continue sincere efforts to reach agreement and prevent the worst outcome.