After delivering a second-quarter report card that stunned the market, Samsung Electronics is once again mired in labor-management tensions over a severe imbalance in bonus distribution. Employees in the semiconductor division stand to receive per-capita bonuses reaching hundreds of millions of won, while those in the smartphone and home appliance businesses expect only about 6 million won (approximately $4,200). The hundredfold gap has directly ignited the fury of non-chip business unions.
On July 7, Samsung Electronics released its second-quarter 2026 earnings guidance, showing the company is sustaining strong momentum in the memory chip super-cycle. Second-quarter revenue reached 171 trillion won (approximately $119.7 billion), up 129% year-on-year and well above the market estimate of 169.23 trillion won. Operating profit surged 1,810% year-on-year to 8.94 trillion won (approximately $6.26 billion). The official earnings report is expected to be disclosed on July 30.
However, this bright earnings preview did not bring joy to all employees. According to a report by China Business News, the “Peer Union,” representing employees in Samsung Electronics’ smartphone, TV, and home appliance divisions, announced it will hold a large-scale rally near Samsung’s headquarters in Suwon, Gyeonggi Province, on July 16, with an estimated 2,000 to 3,000 employees participating, to protest the ultra-high bonus package recently secured through negotiations by the semiconductor division.
The flashpoint for this dispute traces back to a historic compensation agreement reached between labor and management in late May. At that time, Samsung Electronics’ unions ratified the 2026 compensation agreement with a 73.7% approval vote. The core of the agreement was the creation of a “Special Management Performance Bonus” specifically for the Semiconductor (DS) division. Under the plan, approximately 78,000 semiconductor division employees will receive 10.5% of the company’s annual operating profit as stock bonuses, plus an additional 1.5% in cash awards, with the incentive program lasting for ten years.
On July 3, Kim Yong-kwan, President of Management Strategy for Samsung Electronics’ Semiconductor Division, disclosed at an internal all-hands meeting that the company’s full-year 2026 operating profit would align with market consensus, which brokerages broadly estimate at around 300 trillion won (approximately $210 billion). Based on this profit scale, external estimates suggest semiconductor division bonuses will be staggering: per-capita expected bonuses for memory chip business unit employees are approximately 620 million won (approximately $434,000); even employees in the foundry business, which has been loss-making for years, are expected to receive per-capita bonuses of about 190 million won (approximately $133,000).
In stark contrast, employees in non-chip divisions such as smartphones and home appliances, under the existing bonus structure, can only expect about 6 million won (approximately $4,200) per person. The hundredfold disparity has triggered intense discontent within the company.
To ease tensions, on the same day it announced its second-quarter earnings guidance, Samsung Electronics disclosed a board resolution through DART, the electronic disclosure system of South Korea’s Financial Supervisory Service. The company decided to allocate 1,083,400 treasury common shares for employee stock compensation in a one-time move, with a total authorized value of 344.5 billion won (approximately $241 million), covering nearly 50,000 employees, primarily benefiting the Consumer Electronics Division and the Compound Semiconductor Solutions team. Based on the July 6 closing price of 318,000 won per share, eligible employees would receive an average of about 22 shares each, corresponding to a book value of 7 million won (approximately $4,900).
In fact, as early as May 26, during the compensation agreement negotiations, unions representing non-memory businesses, including the Device Experience (DX) Division, had already filed lawsuits attempting to block the electronic vote on the provisional wage agreement. However, due to the limited membership of these unions, the application did not affect the final outcome of the labor-management vote on the provisional compensation agreement.
Samsung Electronics’ internal union system is complex, divided into multiple organizations based on size and departmental origin. Among the three major unions that led the previous compensation negotiations, the largest is the “Super Enterprise Union,” centered on the semiconductor division with approximately 72,000 members. Of these, about 24,000 are in the memory division, about 17,000 in non-memory divisions, and about 22,000 in DS common organizations. The second-largest, the “National Samsung Electronics Union,” has about 15,000 members covering all company departments.
The “Peer Union,” which is now planning the rally, ranks third in size with about 13,000 members, over 70% of whom come from the Device Experience Division. This union initially joined the Super Enterprise Union and the National Samsung Electronics Union in negotiations with management but later withdrew, believing that the DX division’s views were not adequately represented or valued.
Zhan Debin, Vice President of the Korean Peninsula Research Society of Shanghai and Director of the Center for Korean Peninsula Studies at Shanghai University of International Business and Economics, analyzed that from a horizontal comparison, Samsung’s plan to allocate 10.5% of assessed operating performance for employee benefits already exceeds rival SK Hynix’s 10%, and there is no obvious disadvantage in terms of compensation alone. However, he emphasized: “Since Samsung Electronics’ unions are internally composed of employees from various divisions with significant revenue gaps, uneven profit distribution easily leads to internal fragmentation. The differing demands of employees in the highly profitable memory sector and those in weaker-performing divisions have become a concrete manifestation of internal union conflicts.”
A comparison with SK Hynix’s compensation plan shows that the latter signed a ten-year labor-management agreement with its union in September 2025, directly removing bonus caps and establishing a company-wide bonus pool of 10% of annual operating profit each year, covering all regular employees.
South Korean scholar Kim Yun-joon believes that Samsung’s move to specifically allocate treasury shares to non-chip division employees is essentially a remedial measure by management to placate the discontent of these employees. “However, this kind of welfare benefit of distributing shares based on fixed quotas can at best temporarily stabilize emotions and alleviate internal labor disputes. It is very difficult to fundamentally resolve, at the institutional level, the enormous bonus gap between the chip memory business and consumer electronics divisions like mobile phones and home appliances,” he said. He further noted that the current AI boom has greatly boosted the memory chip industry, and it is understandable that employees in other divisions increasingly hope the company will fundamentally readjust the way revenue and profit-sharing are divided.