Members of the National Samsung Electronics Union hold a rally for victory in a general strike at the Semicon Sporex in Samsung Electronics’ Giheung Campus in Yongin, Gyeonggi Province, on the morning of the 22nd of last month. Yonhap News
As Samsung Electronics (005930.KS) surpassed $1 trillion (1,370 trillion won) in market capitalization to join the “trillion-dollar club,” demands for higher performance bonuses are emerging even at its Chinese manufacturing plants. With the earnings and share prices of Samsung Electronics and SK hynix (000660.KS) surging on the AI chip boom, workers at overseas production bases — not just domestic employees — are beginning to demand “compensation on par with headquarters.”
“We Know Exactly What Headquarters Gets”… Chinese Local Hires Demand Bonuses
According to New Daily on the 6th, Chinese employees at Samsung Electronics’ Xi’an semiconductor plant and SK hynix’s Wuxi semiconductor plant are demanding higher performance bonuses.
An industry source told the outlet, “Local hires at overseas subsidiaries know exactly how much headquarters employees are getting paid. As news about Samsung Electronics and SK hynix earnings and bonuses keeps appearing on Chinese portals like Baidu, demands for bigger bonuses are growing louder.”
SK hynix is reportedly aware of the situation. The company said, “We operate performance bonus systems tailored to the characteristics of each country.”
Samsung Electronics, on the other hand, said, “No official request for higher performance bonuses from locally hired employees at the Xi’an plant has been received.”
Trillions of Won Invested in Chinese Plants… Growing Bonus Burden
Samsung Electronics’ Xi’an semiconductor plant in China. Yonhap News
The two companies’ Chinese plants are not merely overseas production bases but serve as key parts of their semiconductor supply chains.
Samsung Electronics’ Xi’an plant is the company’s only overseas NAND flash production base, accounting for approximately 40% of total NAND output. Local workforce is estimated at a minimum of 3,000 employees.
SK hynix’s Wuxi plant is a core base responsible for a significant portion of the company’s DRAM production. The industry estimates that SK hynix employs at least 4,000 to 7,000 workers in China.
Both companies have also been sharply expanding investments in their Chinese plants. According to electronic disclosures filed with the Financial Supervisory Service in March, Samsung Electronics invested 465.4 billion won in its Xi’an plant in China last year, up approximately 67.5% from the previous year.
Samsung Electronics has been accelerating upgrades at the Xi’an production lines since the surge in AI chip demand. The company is reportedly pushing to convert its existing 128-layer-centered process to a 236-layer-centered process.
SK hynix also invested more than 1 trillion won in its Wuxi DRAM plant and Dalian NAND plant last year. Investment in the Wuxi plant alone stood at 581 billion won, up 102% from the previous year.
However, along with production expansion, the bonus burden is also growing. Industry observers warn, “If demands from local Chinese workers spread to overseas production bases in the U.S. and elsewhere, the cost burden could grow far larger.”
Samsung Electronics is building a new foundry plant in Taylor, Texas, while SK hynix is pushing ahead with an advanced packaging plant in Indiana.
Production line at SK hynix’s Wuxi plant in China. SK hynix
Samsung Market Cap Tops $1 Trillion… “Bonus Competition Could Burden Shareholders”
The Samsung Electronics union has demanded performance bonuses equivalent to 15% of this year’s operating profit — up to 45 trillion won — and has signaled the possibility of a general strike. This is about four times Samsung Electronics’ dividend payout of roughly 11 trillion won last year.
Shin Je-yoon, chairman of the Samsung Electronics board of directors, said through an internal bulletin board on the 5th, “If the worst-case scenario unfolds, both labor and management will lose their ground,” expressing concern that it “could lead to a loss of customer trust and even hurt the national economy.”
Samsung Electronics’ outside directors also reportedly urged swift labor-management agreement at a recent board meeting, citing “significant potential harm to corporate value and shareholder interests.”
President Lee Jae-myung also expressed concern at a recent senior secretariat meeting, saying, “Excessive demands by workers in some organizations could inflict harm on other workers.”
Despite the situation, Samsung Electronics’ share price has been surging on AI chip expectations. According to the Korea Exchange and Bloomberg on the 6th, Samsung Electronics rose by nearly 15% at one point during the session, reaching a market capitalization of approximately $1.0586 trillion (1,543 trillion won). It became the second Asian company after TSMC to enter the “trillion-dollar club.”
Samsung Electronics currently ranks around 11th in global market capitalization, surpassing Warren Buffett’s Berkshire Hathaway and Walmart. The market is even discussing the possibility of entering the global top 10.