[Editorial] Bonus over future

The labor union at Samsung Electronics is reportedly seeking 15 percent of operating profit to be distributed as bonuses.

After Samsung Electronics estimated first-quarter operating profit at 57.2 trillion won ($38 billion), the union projected 270 trillion won in annual operating profit for its semiconductor division and said 15 percent — 40.5 trillion won — should be earmarked for bonuses.

Having initially sought to abolish the bonus cap and secure 10 percent of operating profit for bonuses, the union upped its demands after the company posted record results last week.

If Samsung Electronics’ annual operating profit climbs to as much as 300 trillion won, as some optimistic forecasts suggest, bonuses could reach up to 45 trillion won if 15 percent were to be paid out as the union demands.

The union’s demand would amount to roughly four times the 11.1 trillion won in dividends Samsung Electronics paid to about 4 million shareholders last year.

Shareholders are reportedly pushing back hard, as bonuses for roughly 70,000 semiconductor division employees would far exceed the dividends paid to some 4 million shareholders.

The bonuses demanded by the union would also surpass the 37.7 trillion won that Samsung Electronics spent on research and development last year.

By the union’s math, staff members of the memory division would each receive an average pretax bonus of 620 million won.

The average bonus per employee at large companies with 300 or more workers hit a record 18.43 million won last year. The bonus demanded by the union at Samsung Electronics is more than 33 times that level.

Set against Nvidia’s $40 billion bid for Arm, the union’s bonus demand looks astronomical.

At that bonus scale, Samsung Electronics could execute about four merger and aquisition deals comparable to its $8 billion purchase of Harman International or SK hynix’s $9 billion acquisition of Intel’s NAND unit.

The company has already pledged to invest more than 110 trillion won this year to secure leadership in AI chips.

In particular, its share of the global foundry market is just about 7 percent, roughly one-tenth of TSMC's share. Massive investment is needed to take the lead not only in AI chips, but also in this segment.

If investment funds dissipate into one-off bonuses, Samsung Electronics risks rapidly losing its place in the global AI ecosystem.

More concerning is the prospect of a strike. Although the chipmaker has pledged industry-leading compensation, including “special awards” that exceed the 50 percent cap on bonuses relative to annual salary, the union plans a resolution rally on April 23 and to launch a general strike on May 21.

If a general strike goes ahead, hard-won customers such as Nvidia, Tesla and Google could well shift their business to rivals such as TSMC.

Samsung Electronics is riding today’s supercycle in large part because it invested heavily in capital expenditure even during past downturns.

If it embarks on a bonus splurge as the union demands, it could miss out on big-ticket deal opportunities and fall behind in securing leadership in emerging areas such as next-generation high-bandwidth memory.

Semiconductors accounted for 38 percent of South Korea’s total exports in March, underscoring their role as a cornerstone of the economy. With the ceasefire talks between the United States and Iran collapsing, the global economy is treading on thin ice. To weather the crisis, South Korea must reinvest as much of its semiconductor gains as possible.

Sharing gains with employees is justified, but an outsized share risks eroding the company’s long-term growth.

The semiconductor supercycle will not last forever. US pressure is sharpening, and China’s catch-up is accelerating. This is no time to indulge in a bonus splurge driven by boom-time exuberance.

What is needed now is not a wasteful clash over distribution, but a path to sustained labor-management co-prosperity by preserving Samsung Electronics’ “supergap” over its rivals.