Samsung Electronics experienced a significant market value loss of 99.07 trillion won ($66.18 billion) on Wednesday due to a failure to reach a wage agreement with its workers' union. This decline included an intraday drop of 6.09% from the previous closing price of 279,000 won.
The labor union has threatened an 18-day strike starting May 21 if their demands are not met, with over 41,000 workers expected to participate. Union representative Choi Seung-ho expressed disappointment that none of their agenda items were addressed, particularly focusing on the company's performance-based bonus system.
The union is demanding that Samsung allocate 15% of its operating profit to bonuses, eliminate caps on bonus payouts, and formalize the bonus structure. In contrast, Samsung's management proposed a 10% allocation of operating profit for bonuses along with a one-time special compensation package.
The union's rally on April 23, which attracted 40,000 workers, reportedly led to a 58% drop in foundry production and an 18% decline in memory production for Samsung on that day. The potential strike could cost Samsung an estimated 30 trillion won, or about $20 billion.
South Korea's Finance Minister Koo Yun Cheol expressed regret over the lack of resolution and emphasized the importance of avoiding strikes, noting Samsung's significance to the national economy. Following Koo's comments and similar remarks from Prime Minister Kim Min Seok, Samsung's shares reversed their losses and turned positive.
Notably, Samsung reported a remarkable increase in first-quarter operating profits, reaching 57.2 trillion won, a 750% rise compared to the same period last year, largely driven by its chip business