SK Hynix becomes the "betrayer of capitalists" as Samsung employees launch a massive strike

Original Author: Xiaobing, Shenchao TechFlow

Samsung Electronics' labor-management negotiations have finally reached the brink of a strike.

Late on the night of May 12, mediation by South Korea's National Labor Relations Commission broke down. Samsung Electronics union leader Choi Seung-ho told reporters as he left the meeting room, "There's no point in waiting any longer." Barring any surprises, starting May 21, the union will launch an 18-day general strike, lasting until June 7.

The union currently has approximately 74,750 members, with the semiconductor division (DS) accounting for about 80%. According to Choi, around 41,000 people have expressed willingness to participate in the strike, with the final number possibly exceeding 50,000. Considering Samsung's participation rate in labor actions over the past two years, industry analysts estimate the actual number of participants this time will be between 30,000 and 40,000, making it the largest labor action in Samsung's history. A one-day partial strike previously caused a 58% reduction in night shift production at certain production lines. If the 18-day action runs its full course, TrendForce estimates it could impact 3-4% of global DRAM capacity and 2-3% of NAND capacity. JPMorgan estimates that, given the current rift, Samsung Electronics could see its annual operating profit reduced by over 40 trillion won.

The real focal point of the story isn't the strike itself, but the proposal the union rejected.

A 13% Proposal, No Agreement Reached

According to the Financial Times, the two sides had recently narrowed their differences from the initial gap to a very small range. The union's initial demands were to use 15% of the semiconductor division's operating profit as a bonus pool, eliminate the 50% bonus cap, and an additional 7% wage increase. Management's initial response was 10% plus some other benefits. After back-and-forth negotiations, both sides were reportedly close to the 13% figure.

But it hit a standstill.

The union wanted 13% written into the agreement, applied annually based on this formula. Management was willing to pay this percentage as a one-time bonus, calculated based on current earnings, equivalent to approximately $340,000 per person in a lump sum.

It sounds like a minor difference, but the union rejected it.

For employees, the difference is straightforward:

The logic of a one-time bonus is: the company had a good year, so it gives you a payout. Whether it has a good year next year, whether it pays, and under what formula, must be renegotiated annually.

The logic of an annualized profit share is: according to the agreement, a fixed percentage of operating profit inherently belongs to employees. As long as the AI boom lasts, employees share in the gains; when the boom fades, employees accept it.

Both models are "bonuses," but they represent different statuses. The former is a temporary company handout; the latter is an institutional entitlement. With similar amounts, the two arrangements mean the difference between employees waiting each year for management's decision versus having a predictable, written rule.

This is the core issue the union is holding out on.

SK Hynix Has Already Paved This Path

The union's confidence comes from their neighbor.

In the second half of last year, SK Hynix reached an agreement with its union, abolishing the existing bonus cap and establishing a 10% annual operating profit pool for employee profit sharing, valid for the next decade. In February 2026, SK Hynix paid out the first bonus under this new mechanism, equivalent to 2,964% of base salary, nearly $100,000 per person.

SK Hynix's Q1 2026 operating profit surged over five times year-on-year, with an operating margin of 72%, an extremely rare figure in the hardware industry. The reason is clear: it holds over 50% of the global HBM (High Bandwidth Memory) market share and is the main supplier of HBM for Nvidia's H100 and H200. The more AI data centers built, the more it earns.

With annual profit expectations continually revised upward, some South Korean and international media, under optimistic scenarios, project that SK Hynix employees could receive average bonuses around $470,000 this year. If Macquarie's and other institutions' high-profit forecasts for 2027 materialize, the figure could theoretically approach $900,000. These numbers should be viewed cautiously as projections based on optimistic profit assumptions, not money already in hand. However, even based on already-issued bonuses and conservative second-half estimates, the absolute figures far exceed Samsung's current proposal.

Since December last year, approximately 200 Samsung employees have moved to SK Hynix, according to the Samsung union's own count. This is a very rare migration direction among engineers because SK Hynix has been consistently outperformed by Samsung over the past decade. But this time, the bonus structure changed, and people followed.

It's Hard for Samsung Management to Concede

From the outside, Samsung seems stingy, but from management's perspective, the situation is more complex than it appears.

Samsung Electronics is not just a memory chip company. It has multiple business lines: mobile phones, home appliances, display panels, foundry, and memory. The semiconductor division is doing well this year, but other departments may not enjoy the same cycle. In Q1, the operating profit of the DX (Device eXperience) division was already declining. If semiconductors alone had a 15% profit share written into the contract, someone within the group would immediately ask: Why do they get a special share, and not us?

According to external analysts, if Samsung's semiconductor division truly allocated 15% of its operating profit to employees, the corresponding bonus pool would reach 40 to 45 trillion won, an amount higher than SK Hynix's entire annual operating profit. The issue is not that the company is "reluctant," but that once such a large fixed expenditure is institutionalized, it would be very difficult to reverse in the future.

What management is most unwilling to do is to write the "formula-based profit share" into the contract. If this precedent is set, the DX union and display panel union will negotiate using the same logic next year. The entire internal wage order of the Samsung Group would be reshuffled, and labor contracts across South Korea's chaebol system would be referenced anew.

Therefore, Samsung would rather endure strike losses and face criticism from unions and media for being "stingy" than yield on the term "annualization."

This Issue Won't Stop in Korea

The specific date when the union and management reach a compromise is not the most important thing in the long run.

What matters is this: Scarce positions in the AI supply chain have begun to renegotiate pricing terms.

For the past three decades, the Silicon Valley playbook has been to use equity incentives to tie employees' fortunes to the company's stock price. But this playbook has two implicit prerequisites: the company must go public, and employees must join early. Later-hired engineers, after option dilution, get far less than those who came before them.

SK Hynix has charted a second path: no need to wait for an IPO, no need to look at stock prices. It uses cash profit sharing to turn employees into cycle partners. Its advantages are a transparent formula, a clear timeline, and predictability. The cost is that the company must acknowledge that employees are not just a cost item but also part of the profit equation.

Once this path is successfully tested at SK Hynix and some version emerges from Samsung's negotiations, the next companies facing similar questions may not be limited to South Korea.

How do TSMC's engineers feel about how much Nvidia makes on every GPU sold? How do ASML's workers view the $200 million price tag of an EUV lithography machine? Will veterans from legacy industries supplying liquid cooling, power, and transformers to data centers suddenly realize they hold scarce resources?

Not all questions will have immediate answers, but the questions have been asked.

Over the past two years, capital markets have had an initial answer to "who gets the AI dividends": Nvidia shareholders got the first bite, followed by TSMC, SK Hynix, and Samsung capturing industrial dividends through capacity and pricing. This is inter-company distribution.

The intra-company distribution is just beginning.

These 18 days starting May 21 may end with a union victory or some compromise, perhaps with management yielding on "annualization" by writing it into a shorter-term agreement with an exit path. The specific outcome will affect the size of this contract, but not the fundamental direction.

SK Hynix employees have already received their first profit-sharing ticket. Samsung employees are striking to secure theirs. Who gets the next ticket, when, and in what form, might be one of the most compelling undercurrents to track in the AI supply chain over the next three to five years.