Samsung has responded to tens of thousands of chip workers by reaching a final agreement on higher salaries and bonuses. After months of negotiations, an eighteen-day strike was threatened last week, but this has now been averted. A temporary agreement had recently been reached.

The South Korean tech company now promises to pay out 10.5 percent of its profits to employees of its chips department. Employees who work on chips can receive bonuses of 120,000 to 350,000 euros.

Due to the global AI boom, Samsung has made huge profits in recent times. The company is the largest producer of memory chips in the world and demand is soaring.

According to Korea expert Casper van der Veen, employees of the chip division felt that they should also benefit more from this. “Normally the maximum bonus at Samsung is around half of an annual salary, but employees felt that with a profit growth of 750 percent, more should also go to the staff,” Van der Veen told NOS.

Samsung actually wanted to reinvest a large part of its profits to further grow the company, instead of significantly increasing wages. This threatened a strike with potentially major economic consequences. “That strike could have cost not only Samsung but also the South Korean economy billions. Samsung represents about a fifth of South Korea’s economy.”

The government intervened directly in the negotiations for fear of major economic damage. The chip sector is crucial to the country’s exports and critics say prolonged strikes could even impact the global supply of AI chips. A court had therefore already banned parts of the strike.

With the agreement, more than 10 percent of the profit will now be distributed among employees of the chip division. In addition, salaries will increase by an average of 6 percent and Samsung helps employees buy a home. According to Van der Veen, house prices around the factories are already rising due to the news about the deal.

The generous arrangement is now causing dissatisfaction in other departments within Samsung. For example, workers who make televisions, smartphones or household appliances only receive a few thousand euros extra. “Normally you would be happy with that, but if colleagues from another department receive up to a hundred times more, it naturally creates crooked faces,” says Van der Veen. Some employees are even said to have filed an emergency lawsuit to stop the deal.