Samsung is expected to avoid the biggest shutdown crisis in history? The South Korean government intervenes urgently, and both parties open the final negotiations 48 hours before the strike.

Samsung Electronics and its South Korean labor union began a new round of government-mediated negotiations on Tuesday in hopes of breaking the deadlock in salary and bonus negotiations, and avoiding the largest strike in the history of this tech giant. Both parties are facing increasing pressure to prevent an imminent strike involving 45,000 workers, as the strike could disrupt chip production and harm the South Korean economy and global supply chain. The South Korean Prime Minister warned over the weekend that emergency arbitration would be used to resolve this crisis. The chairman of the South Korean National Labor Relations Commission told reporters that significant differences still exist between Samsung and the union in Monday's negotiations. However, he said on Tuesday that the two sides are narrowing some of the differences and a deal is still possible. On Tuesday afternoon, Samsung Electronics' stock price rebounded, erasing the morning's 5.3% decline. South Korean business groups urged the union on Monday to abandon their strike plans and called for the government to "immediately" initiate emergency arbitration to suspend the strike. The strike is scheduled to begin on Thursday and last for 18 days. Samsung is the world's largest memory chip maker, accounting for nearly one-fourth of South Korea's exports. The threat of a strike comes at a time when there is a global shortage of memory chips, which are essential components for artificial intelligence data centers, smartphones, and laptops. This shortage in recent months has boosted profits for Samsung and its competitors. Growing wage gap between Samsung and SK Hynix This dispute is the largest conflict between Samsung and its labor union since 2020. In 2020, a few months after Samsung's first labor union was formed, Samsung Electronics Chairman Lee Jae-yong promised to shed the reputation of its "anti-union" activities. Samsung is one of South Korea's most prestigious workplaces, but employees are becoming increasingly frustrated about the growing wage gap with smaller competitor SK Hynix. SK Hynix has taken the lead in providing high-bandwidth memory (HBM) required for artificial intelligence chipsets to NVIDIA. Union members say that SK Hynix reformed its wage structure last year, resulting in bonuses being more than three times higher than those at Samsung, accelerating talent loss to SK Hynix and prompting a significant increase in Samsung union membership. As the AI boom drives chip demand, Samsung's record profits have further fueled anger among workers. The union is demanding that Samsung abolish the 50% cap on annual bonuses, allocate 15% of annual operating profit to a bonus pool shared by employees, and formalize this in the contract. Samsung, on the other hand, proposed to maintain the bonus cap while giving "special" bonuses to employees in the memory chip division above the level of SK Hynix employees. On Saturday, Lee Jae-yong publicly apologized to customers and the public for the labor dispute, marking his first public comments on the issue. Samsung's customers include Alphabet, Apple, Amazon, and NVIDIA. On Monday, a court partially approved Samsung's injunction request, ruling that certain production facilities must maintain a basic level of staffing during any strike action.