Samsung shares drop after labor union talks fall through

Shares of Samsung Electronics (KS:005930) dropped on Wednesday after the company and its largest labour union failed to reach a wage agreement, raising the prospect of a large-scale strike.

Samsung shares dropped more than 5% to 264,000 won in Seoul trading after government-mediated talks with the National Samsung Electronics Union collapsed following marathon negotiations that stretched into early Tuesday.

The union, which represents more than 50,000 workers, plans to proceed with an 18-day strike beginning May 21 unless management improves its offer on wages and performance bonuses.

Workers are demanding the removal of a cap on bonus payouts and want a larger share of profits from Samsung’s booming artificial intelligence chip business.

The dispute comes as Samsung seeks to catch up with rival SK Hynix Inc (KS:000660) in the high-bandwidth memory chip market used in Nvidia’s AI processors. Employees have pointed to substantially larger bonuses paid by SK Hynix after its strong AI-driven earnings growth.

Samsung said it regretted the collapse in talks but would continue dialogue with labour representatives.