The labor union at South Korea’s Samsung Electronics held off on launching a planned 18-day strike Wednesday after reaching a last-minute, tentative wage deal with the company management, alleviating immediate concerns about a potential operational shutdown at the world’s leading memory chip maker.

The tentative agreement comes roughly six months after the union’s formation in November 2025. During this period, labor-management relations severely deteriorated, culminating in a public apology from Samsung Electronics chairman Lee Jae-yong in May.

The primary catalyst for the wage dispute was a compensation system introduced by rival chipmaker SK Hynix. As the explosive growth of the AI industry boosted the broader memory chip sector, SK Hynix implemented a lucrative reward system that allocates 10 percent of its annual operating profit to employee bonuses.

Samsung workers openly expressed frustration over their compensation after witnessing SK Hynix employees receive record-breaking payouts. Consequently, union membership skyrocketed from approximately 6,300 in September 2025 to over 76,000 in April 2026. The union now represents nearly half of Samsung’s 130,000 domestic workforce.

The path to the agreement was fraught with tension. Following the breakdown of initial negotiations, mediation led by the head of the Gyeonggi Regional Employment and Labor Office also failed, prompting the union to declare a general strike scheduled to begin on May 22.

A breakthrough was achieved just eight hours before the strike deadline, driven by an unprecedented direct intervention from Employment and Labor Minister Kim Younghoon. It is highly unusual for a cabinet minister to participate directly in negotiations for a specific company.

Under the tentative agreement, the performance bonus pool will be set between 11.5 percent and 12 percent of the company’s operating profit, with no specified upper cap. In exchange, the company management attached several conditions: bonuses will only be granted when specific performance targets are met, and they will be paid in company shares rather than cash, subject to a mandatory lock-up period.  

The deal now hinges on a union-wide vote scheduled from May 22 to 27, requiring a simple majority to pass. However, concerns over internal friction remain. Because Samsung Electronics comprises diverse business divisions with varying levels of financial performance, there is lingering apprehension about potential conflicts among union members from different departments regarding the new bonus structure.