Samsung’s Looming Labor Strife Could Reverse Semiconductor Surge

A strike on the other side of the world rarely draws much U.S. interest. But the labor negotiations at Samsung Electronics (KR:005930) have broad-reaching ramifications for the world’s hottest sector, semiconductors.

Samsung faces an 18-day strike if it can’t come to an agreement with its workers. Close to 48,000 workers are due to put down their tools on Thursday if no deal is reached.

Almost One-Quarter of the Korean Economy

Samsung Electronics is the world’s largest memory-chip maker. The broader Samsung chaebol, or conglomerate, accounts for 23% of the entire South Korean economy, and a similar proportion of its exports.

The main union seeks a 7% increase in base pay, for 15% of operating profits to be set aside for bonuses, and wants a cap on bonuses at 50% of salary to be scrapped. Samsung says that’s far too expensive, and is offering a 10% rate besides a one-time bonus package.

The union also wants 70% of the semiconductor-business bonus pool to be shared across the company, with 30% based on performance. Samsung says this would undermine the purpose of performance-based pay, rewarding loss-making divisions that are underperforming.

Strike Due to Start Thursday

The strike is due to start on Thursday. A first round of talks proved inconclusive, although a second round continues for a second day on Tuesday. The chair of South Korea’s National Labor Relations Commission, Park Soo-keun, says there’s still the chance for the two sides to reach an agreement, according to Yonhap news agency, with both sides making concessions. The commission is mediating the talks.

It is not unusual for the annual wage negotiations in South Korea to turn nasty. Strikes occasionally turn violent, most notably in 2009 at the carmaker SsangYong Motor. The sudden decision to cut close to 40% of the work force led to a 77-day siege where workers barricaded themselves inside the compound, only to be attacked by police commandos and heavily armed riot police. SsanYong was eventually bought in 2023 by the KG Group, which dropped the use of the SsanYong name.

Samsung has done its darnedest to deter unions within the company. But workers did walk off the job in 2024, the first time that work had stopped at any Samsung group company.

Court Ruling Limits Union Action

Samsung won a small victory this week with a court ruling requiring the union to allow normal staffing levels necessary for safety, the protection of facilities and product quality control. The Suwon District Court ruling also prevents union leaders from occupying or blocking access to company sites.

Still, the South Korean government is mulling the use of its emergency arbitration mechanism, something Korea has only invoked four times since it was first deployed in 1969. The last use came in 2005 when pilots from Asiana Airlines (KR:020560) and then Korean Air Lines (KR:003490), the two largest Korean airlines, went on strike. The government ordered the pilots back to work, saying the walkouts were hurting the economy.

Prior to the start of last year, Samsung shares had been punished for the company’s overreliance on cheaper Dynamic Random-Access Memory (DRAM) and NAND (short for the computer-logic term “Not And”) memory chips. But the company has worked double time to catch up to domestic rival SK Hynix (R:000660) in making the High-Bandwidth Memory (HBM) chips necessary to power artificial intelligence hardware.

Samsung Shares a 5-Bagger

Samsung shares have so far moved based on sentiment for the global chip business more than its own labor travails. Samsung’s stock gains play a large part in explaining why the Seoul market is the world’s best performer both this year and last.

Samsung Electronics stock has already doubled and then some in 2026, up 129.8% so far in 2026. Look back at the start of 2025, and the shares have quintupled, up a whopping 413.0%. The gains drove the Kospi benchmark in Seoul to a 75.6% advance last year, and it is up another 72.6% so far in 2026.

Samsung workers are in fact aggrieved that their compensation packages are lower than those at Hynix. The Samsung Electronics Labour Union says that bonuses at Hynix are triple the level at Samsung, causing Samsung workers to defect. Hynix in September reached a deal with its union to reform pay and deliver hefty bonuses.

Samsung shares are down just 2.0% on Tuesday, with Hynix off 5.2%, following the slide in tech stocks on Wall Street the day before.

Memory-Chip Exposure Via DRAM

U.S. investors can access a play on Samsung and Hynix via the Roundhill Memory ETF DRAM. It is up 94.2% since it listed on April 2 at $25, trading now at $48.50 as I write.

Samsung (25.0%), Hynix (24.2%) and Micron Technology (MU) (23.8%) make up just shy of 75% of the exposure, with the remaining 25% invested into Kioxia Holdings (KXIAY) (T:285A), SanDisk (SNDK), Western Digital (WDC), Seagate Technology Holdings (STX), Nanya Technology (NNYAF) (TW:2408) and Winbond Electronics (WBEKY) (TW:2344).

It’s a highly effective if concentrated way to gain chip exposure, particularly given that Samsung and Hynix are listed in Seoul, Kioxia trades primarily in Tokyo, and Nanya and Winbond have their primary listing on the Taiwan stock exchange.

Korea-Japan Ties at a Strongpoint

Against that backdrop, Japanese Prime Minister Sanae Takaichi is on Tuesday starting a two-day trip to South Korea, to meet with South Korean President Lee Jay Myung. The aim is to boost economic ties between the East Asian nations, as well as addressing mutual security challenges presented by their neighbor China and the conflict in the Middle East.

Takaichi and Lee already met in January in Takaichi’s hometown, Nara, and Tuesday’s visit includes a trip to Lee’s hometown, Andong. Tuesday’s talks led to a commitment to cooperate on oil and liquid natural gas supplies, as well as to support supply chains between the two nations.

Relations between Japan and South Korea are at a warm level, having in the past devolved into Korean claims that Japan had not apologized enough or compensated Koreans enough for its World War II past. Takaichi and Lee are stressing the importance of “future-oriented” ties and the “strategic importance” of bilateral ties.

Japan and Korea have found common ground in needing to offset China’s rise in prominence, and with the United States commitment to defend either country called into question by criticisms from U.S. President Donald Trump that neither country is paying enough for the “privilege” of housing U.S. forces, with 28,500 U.S. troops stationed in South Korea and around 55,000 in Japan.

Takaichi is compiling a supplementary budget in Japan to fund energy subsidies, with petrol prices capped at ¥170 ($1.07) per liter. The likely increased spending by the heavily indebted Japanese government is pushing the yen weaker again on Tuesday, just shy of ¥160 to the U.S. dollar. That degree of currency weakness has led to direct intervention into the currency markets to prop up the yen.