Huge AI Bonuses Spark South Korea Tech Wealth Fight

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1:45After months of tense negotiations, Samsung Electronics struck a deal with its labor union, narrowly averting a strike that would have shut down one of the world's most important chipmakers and South Korea's largest companies. A lot of relief there, that tentative deal being reached with the labor union, averting that potentially crippling strike that had been slated to begin. The drama surrounding the talks had media outlets around the world taking notice. But it's the details of Samsung's agreement with its workers that has the tech world in particular still buzzing. Samsung chip workers could soon get massive AI-fueled bonuses, averaging about US$340 ,000 after the company reached a deal to avoid a strike.

2:28The chips division is the most important business within the conglomerate. Yu Lim Lee is Bloomberg's senior tech reporter based in Seoul. The semiconductor unit accounted for more than 90 % of the company's profit in the first quarter. They are the crown jewel of the company at the moment, so they get the biggest share of the bonus. But together with their salary, this could mean about half a million dollars just in one year. And potentially more if Samsung makes more profit. Samsung is the world's largest maker of memory chips, the very components powering today's AI boom. Last month, the company's valuation surged past$1 trillion.

3:16That puts it in serious contention with Apple and NVIDIA to become the world's most profitable company. Its revenue is often described as equivalent to roughly one-fifth of Korea's GDP. But that AI windfall hasn't really trickled down to Samsung employees. After Samsung posted record profits this year, employees demanded a bigger slice of the AI Pi 2. And workers threatened to walk out if they didn't get it. It wasn't just about a few percentages points in salary. Workers were essentially saying, we helped create this AI boom. Samsung is making extraordinary profits from memory chips. We want a proper share of the upside.

4:04The government twice tried to mediate through a tripartite system we have in Korea. for this type of labor disputes, but they failed to lead to any agreement. So in the end, labor minister had to step in at the last minute to mediate the talks. I'm sure there was such a relief when the deal was struck. Yeah, absolutely. It was a big relief for a lot of people. But very quickly, that turned into a resentment inside other parts of Samsung. All Samsung workers are set to receive bonuses this year. But memory chip workers are now set to get 100 times more than employees who work on more everyday product lines like smartphones, TVs and home appliances.

4:48And that disparity has set off a firestorm over how to fairly share the AI windfall. Samsung avoided the strike, but it's not the end of the debate. It simply moved the debate from the picket lines to the boardrooms and courtrooms and larger global conversation about who gets paid in the AI age. The closer you are to that core bottlenecks like chips, AI models, cloud infrastructure, power, the greater your leverage and compensation. What Samsung showed is that this is no longer just a Silicon Valley office conversation. it has become a factory floor issue and a global labor issue.

5:37This is The Big Take Asia from Bloomberg News. I'm Wan Ha. Every week, we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever-shifting region. Today on the show, the labor conflict shaking up Samsung. How a dispute over bonuses is tearing apart one of the world's most influential tech giants. What it could mean for South Korea's booming tech sector. And how the controversy could ripple out to the rest of the world over how AI profits should be shared.

6:17In South Korea, Samsung is more than just a business. It's the country's largest conglomerate, spanning electronics, telecommunications and semiconductors. So when the prospect of a strike arose late last year, Bloomberg's Yulim Lee and her team started paying close attention. Samsung is one of the pillars of the Korean economy and one of the central suppliers of the global technology chain. So a prolonged walkout would have hit three levels at once. First, Samsung itself, especially because it is trying to catch up in advanced memory called high bandwidth memory for AI. Second, Korea, because semiconductors are so central to exports.

7:01They account for 36 percent of Korea's total exports in the first quarter. And third, the global AI supply chain, because AI's servers and data centers all depend on advanced memory chips. So the fear was not just that Samsung would lose production for a few days. The fear was that a labor dispute could interrupt Korea's most important industrial engine at the exact moment that the world is racing to build AI infrastructure. Now, how did Samsung, one of the world's biggest tech companies, get so close to being on the brink of a strike in the first place? The spark was the bonus gap. This morning, Samsung posting record quarterly losses in its chip division, showcasing the fallout from the global downturn on tech firms.

7:51In 2023, Samsung's semiconductor division suffered huge losses because the traditional memory market collapsed during the down cycle. Workers in the chip division were effectively told there would be a zero bonus for them. Then across town, SK Hynix was becoming the darling of the AI trade because it moved faster in high bandwidth memory called HBM for NVIDIA. SK Hynix is another South Korean chip giant. It's the world's second largest memory chip maker and one of Samsung's fiercest competitors. In 2024, SK Hynix posted record revenue and profits, while Samsung's semiconductor arm was still struggling to catch up.

8:35So Hynex basically agreed to give 10 % of its operating profit as bonuses to employees for the next 10 years. It was a precedent-setting move. So that comparison was brutal. Samsung's employees were watching SK Hynex workers becoming symbol of the AI boom while they were being asked to absorb austerity. So when Samsung's profit came roaring back starting the second half of last year, workers said, we accepted the pain during the downturn. Now we want to share the upside. Last December, Samsung's unions began their annual wage talks with the company. But those negotiations dragged on for months without an agreement.

9:20Samsung employees face this 50 % cap on the bonuses, which means bonuses cannot be more than 50 % of their annual salary. So when the SK Hynix benchmark changed expectations completely, Samsung employees are starting to ask, why not us? And that frustration culminated in a huge rally outside Samsung's street production hub in Pyeongtaek, with workers demanding a greater share of profit generated by this boom.

9:53In April, tens of thousands of unionized workers rallied outside Samsung's main chip hub. They demanded a bigger share of the profits from the AI boom. Now, Samsung has three unions, but they don't all carry the same weight. The largest one, representing mostly chip workers, is by far the most powerful. The chip division accounts for more than 90 percent of Samsung's operating profit and employees about 60 percent of the workforce. That union carried enormous leverage during the wage negotiations that just ended. The largest union had the legal authority to negotiate on behalf of everyone. But Yulam says it did not fully reflect the interests of all Samsung employees.

10:39The other unions tend to represent workers in different divisions, including mobile phones, TVs, and consumer electronics. And they have a voice, but when the company's profits are particularly generating by semiconductors, the chip workers naturally had more bargaining power. The negotiations went round and round for weeks without an accord, to the point that the government came on board as a go-between. The government was worried about exports, GDP growth, investor confidence and semiconductor supply chains. The Bank of Korea warned in an internal report that the strike could have a material impact on natural growth.

11:23Eventually, Samsung created a new bonus structure and agreed to set aside the equivalent of about 12 percent of its operating profit for chip workers. Samsung's compensation formula has long linked to bonuses, to divisional performance. And Samsung's argument is straightforward. The chip business generated profits, so that's where the rewards go. Yulam says the exact bonus varies depending on job type and salary level. But broadly speaking, the deal means employees in the chip division could see payouts of several hundred thousand dollars each. It's really everyone in the chip division. Production line operators, technicians, engineers, researchers and managers.

12:08Workers in Samsung's other divisions are livid. Their bonuses are just a fraction of what chip workers secured. Still, over their objections, the deal was approved in a union vote last week. And that's the twist in this story, in my view. Samsung solved one labor conflict and immediately created another fairness debate inside the company itself.

12:35Samsung's declined to comment. After the break, how this historic labor deal risked tearing Samsung apart, and why the fight over sharing the AI windfall in Korea and across the global tech industry is far from over. support for the show comes from public lately it feels like there are two types of investing platforms some are traditional brokerages that haven't changed much in decades and others feel less like investing and more like a game public is positioned differently it's an investing platform for people who are serious about building their wealth on public you can build a portfolio of stocks options bonds crypto without all the bugs or the confetti retirement accounts yep High-yield cash?

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14:29Last week, about 60 ,000 Samsung employees voted to approve a controversial bonus deal reached with the company's management. Here's Bloomberg's Yulim Lee. Samsung is trying to compete aggressively in advanced AI chips such as HBM, which are very difficult to make. And that requires focus, speed, and engineering intensity. And you need talent to do so. And to do that, they have to compensate them on par with its rivals. Samsung's semiconductor workers are celebrating life-changing bonuses, averaging$340 ,000 U.S. dollars. But in less profitable units like smartphones and consumer electronics, employees are feeling left behind.

15:15Their average bonus, just$4 ,000. There's been an outpouring discontent by non-chip workers in the company's internal network, as well as anonymous online forums in Korea. How demoralized they are, how discouraged they are. The mobile division has supported the chip division when the division was going through a down cycle. But now they do not feel that they are part of the same company anymore. So it has really created a deep division within Samsung. How is the settlement seen in Korea? The results are seen incredibly unfair. And the one that sets very dangerous precedent in corporate Korea Because of the gap between the ones that generate profits and those are not.

16:13And it's seen as a very big issue about equality in the country. Given that, that this is potentially so disruptive to Korean society and corporate businesses, is the government planning to do anything about it? Yes, Samsung and SK Hynix, both of which has crossed a$1 trillion market cap recently. What this means is that the government is going to get a lot of profit in terms of excess tax revenue. They have never had this before. So they are grappling with this issue that they never had to deal with before. How to spend this money in a most effective way. So recently, the chief policy advisor to president has come out and made this social media post about, hey, we need to really think about how to spend this money for the future of Korea.

17:16And maybe we need to start thinking about citizen dividend. Does this new labor problem that's been created by the deal, does this internal division within the company's workers, does that threaten Samsung's ability to compete in the very super important and critical AI race? In my view, as a reporter who's been working on this for a long time, I think actually this is the biggest risk Samsung has right now. What do you think this dispute says about the state of business, the state of industry in South Korea? I think this dispute exposed a much deeper shift inside South Korea's economy. For decades, large companies operated under a fairly traditional model.

18:05Workers accept long hours and loyalty in exchange for stability. But the AI boom is changing that equation. When profits become extraordinary, workers increasingly want an extraordinary share. And this will likely ripple across other companies. Once Samsung workers secure a formula tied to profit, workers in other companies will start asking why they should settle for discretionary bonuses. We are already seeing this happening in other companies like Hyundai Motor and Kakao. They are threatening to go on a strike. So as someone put it, we are living through an industrial shift on a scale of the 19th century, figuring out how to share these extraordinary profit isn't just a Samsung problem.

18:56It's a global conversation. Now, there is a lot of discussion about how the AI wealth should be shared. How do you think this is going to play out in the tech world? I think it's going to have a huge ripple effect. We already seen people talking about it at TSMC. I think people in Silicon Valley would immediately recognize this dynamic. At companies like OpenAI, Anthropik, you know, NVIDIA, the unspoken question is often like, how close am I to the AI profit pool? This is probably one of the first real world examples of the AI wealth distribution debate. For years, we've talked about AI creating winners and losers in theory.

19:41Samsung showed what that looks like in practice. A company generated extraordinary profits from a technology boom, and suddenly workers are arguing over who deserves a share. And today, it's semiconductor workers in South Korea. Tomorrow, it could be software engineers in California, logistics workers in Europe or Taipei, or factory workers anywhere AI changes productivity. The specific numbers may be unique to Samsung, but the underlining question is global. When AI creates enormous wealth, who gets paid?

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