Samsung’s Biggest Strike Ever Just Sent Micron and SanDisk Shares Higher

TLDR

• Over 47,000 Samsung Electronics workers began an 18-day strike on May 21 after wage negotiations collapsed
• Samsung stock fell around 3% on the Korea Exchange following the breakdown in talks
• Workers are demanding bonuses equal to 15% of annual operating profit and removal of a 50% salary bonus cap
• Samsung rejected the government’s mediation proposal, calling union demands excessive
• Competitors Micron and SanDisk rose in premarket trading as investors weighed potential supply disruptions

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Samsung Electronics is facing the largest labor action in its history. More than 47,000 workers began an 18-day strike on Thursday, May 21, after wage talks with the company fell apart.

The strike follows the collapse of a government-mediated deal. Samsung’s union had agreed to the proposal from South Korea’s National Labor Relations Commission. Samsung asked for more time to consider it, then declined.

Union spokesperson Choi Seung-ho said the union was disappointed by how it ended. “We express deep regret that the post-mediation process was terminated due to the delay in management’s decision-making,” Choi said.

What Workers Are Demanding

The core of the dispute is Samsung’s bonus system. Workers want bonuses set at 15% of the company’s annual operating profit. That is higher than the 10% rate agreed to by workers at rival SK Hynix.

Workers also want to remove a cap that limits bonus payouts to 50% of an employee’s annual salary. They are pushing for a formalized bonus structure and guaranteed payouts for employees in units that post a loss.

Analyst Kamil Dimmich of North of South Capital said removing the bonus cap permanently would weigh on Samsung’s profitability.

Samsung stock fell about 3% on the Korea Exchange when the news broke. By the close of trading Thursday, shares had recovered to end the day down 0.2%, after being down as much as 4% earlier in the session.

Government Response and Impact on Rivals

South Korean President Lee Jae Myung and Prime Minister Kim Min-seok both urged the two sides to reach a deal before the deadline. The Prime Minister warned the government could use emergency measures if the strike threatened the national economy.

Under South Korean law, the labor minister can invoke an emergency adjustment order to suspend the strike for up to 30 days.

A South Korean court also ruled that any strike cannot interfere with safety operations or damage semiconductor manufacturing equipment.

Samsung accounts for about one-quarter of South Korea’s total exports and is the world’s largest memory chip maker.

Rivals Benefit From Market Uncertainty

Micron rose 3.9% in premarket trading Thursday. SanDisk gained 2.2%. Investors are weighing whether a prolonged strike could disrupt Samsung’s chip output and benefit competitors.

Micron Technology, Inc., MU

SK Hynix shares closed flat on the day.

Wall Street currently holds a Moderate Buy consensus on Samsung’s US-listed shares, with an average price target of $149.40, implying about 6.71% upside. The stock has gained around 115% year-to-date.

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