The largest union at Samsung Electronics has suspended a planned strike after reaching a last-minute tentative pay agreement with the South Korean technology giant.
This move has temporarily eased fears of disruption at the world's largest memory chipmaker during a boom in the building of artificial intelligence (AI) data centres.
The union, which represents nearly 48,000 workers, said industrial action that was due to begin on Thursday would be suspended while members vote on the deal from 22-27 May.
The dispute centres on how to distribute profits generated by soaring demand for AI memory chips.
At issue is the distribution of bonuses between staff in memory chip divisions and those in other units. Samsung had planned to pay generous bonuses to 27,000 staff making memory chips – at least six times more than its workers making other chips and electronics.
The union said that 23,000 workers who were making less advanced chips for companies like Tesla and Nvidia should not be left behind, raising concerns over potential disruption to chip production, with major implications for global supply chains and South Korea's export-driven economy.
Samsung, the world's largest memory chipmaker by sales, faces increased competition from rivals SK Hynix and Micron amid growing demand for AI-driven chips.
In a sensitive moment for the company, Samsung's operating profit in the January to March quarter jumped about 750% from the previous year, while the soaring demand for AI chips pushed its market valuation past $1 trillion.
With rising concerns over competitiveness in labor conditions, the Samsung union's agreement seeks to remedy disparities in bonuses between different worker divisions. The strike's potential impact had been forecasted by JP Morgan to reach up to $20.79 billion.
After the announcement, Samsung's shares rose by more than 5%, reflecting optimism in the market following the agreement.
