Samsung's first shot. The Korean moneylords are "collective."

Original source:See you on Wall Street

Samsung's chip workers waited long for this day。

On May 27, 48,000 Samsung employees voted for a pay agreement - They will take 10.5 per cent of the pre-tax operating profits of the Samsung Semiconductor Enterprise as a special bonus. Partially stored chip workers, combined with historical retroactive bonuses, amounted to $4.16 million. President Lee of Korea said to the cabinet last week that the nature of the matter was clear: "How can a worker load his money before taxes, even investors can only take dividends from net profits after taxes?"

Even the president thinks the workers are in line. But Samsung has no choice but to recognize the gun。

SK HERCULES CUT THE STITCH FIRST

THE STORY HAS TO START WITH SK HERCULES。

IN THE PAST TWO YEARS, HBM (HIGH BANDWIDTH STORAGE CHIP) HAS BECOME THE MOST SCARCE PART OF THE AI INFRASTRUCTURE. THE GPU OF INVERDA IS STRONGER WITHOUT HBM. AND IN THIS MARKET, SK HERCULES ATE THE BIGGEST SHARE AND SAMSUNG WAS CHASING. THE PROFITS OF SK HERCULES HAVE SOARED — OPERATING PROFITS ARE EXPECTED TO BE CLOSE TO 2.5 TRILLION WON IN 2026, EQUIVALENT TO $170 BILLION. ACCORDING TO ITS PROVISIONS, 10 PER CENT OF THE OPERATING PROFITS ARE PAID DIRECTLY TO EMPLOYEES, AND THE AVERAGE BONUS PER EMPLOYEE THIS YEAR IS EXPECTED TO BE 600 MILLION WON, OR $430,000, EQUIVALENT TO 2964 PER CENT OF THE BASIC SALARY。

Samsung's chip worker made a check and started jumping。

ACCORDING TO THE SAMSUNG UNION, THE EMPLOYEES ARE RUNNING TO SK HERCULES. IT'S NOT JUST ABOUT MONEY. THE GAP IS A CLEAR SIGNAL: SK HERCULES WON THIS ROUND OF AI MEMORY COMPETITION, AND HE CAN PAY IT; SAMSUNG IS BEHIND HBM AND HE CAN'T. THE BRAIN DRAIN, IN TURN, SLOWS THE PACE OF TECHNOLOGICAL CATCH-UP BY THREE STARS AND CREATES A VICIOUS CIRCLE。

BY THIS YEAR, THE SITUATION HAD BECOME UNTENABLE. FOUR HUNDRED AND EIGHTY THOUSAND WORKERS ARE ON STRIKE FOR 18 DAYS. IN 2026, THE SINGLE-SEASON OPERATING PROFITS OF THE DS ENTERPRISE AMOUNTED TO 53.7 TRILLION WON, EXCEEDING THE YEAR-ROUND SUM OF 2025. IT COULD AFFORD THE BONUS BUT COULD NOT AFFORD THE 18-DAY STOPPAGE。

The agreement was signed. Samsung became the second largest firm in Korea to have a written link between a fixed percentage of operating profits and an employee bonus。

Pre-tax cut. This is a global corporate governance arrangement

The deal really upsets the business community, not the money, the two wordsPre-taxI don't know。

The usual logic is that the company earns money and pays taxes first, and a portion of the remaining net profits is retained and a share is given to shareholders. An employee's bonus, measured at cost, deducted from income, is different from profit distribution. Now, Samsung workers get a fixed percentage of direct profit from business (before tax). Their distribution is in order, after the tax authorities and before the shareholders。

Kim Ki-chun, Professor of Law at the University of Korea, said that this was contrary to "the long-standing practice of global corporate governance". President Lee’s statement is even more straightforward: investors’ dividends come from net post-tax profits, and how can workers take them before shareholders

SK HERCULES DID THE SAME THING EARLIER, EXCEPT THAT IT DIDN'T CAUSE SUCH A SHOCK. THE SIZE OF SAMSUNG IS DIFFERENT - SAMSUNG'S SALES ACCOUNTED FOR 22 PER CENT OF KOREA'S GDP IN 2010. THREE-STAR NODS ARE EQUAL TO INDUSTRY STANDARDS IN KOREA。

The Korea Federation of Enterprises has issued a statement that the language is rarely strong: "The special circumstances of Samsung should not be generalized by labour groups and be extended to industry as a whole." The phrase itself speaks for itself: they know they can't stop it, but they say "others."。

The three variables are in place. The financier can't stop this time

Korea's system of financiers has suppressed labour for decades on three counts: opacity of profits (workers do not know how much the company earns), weak trade unions (only 13 per cent in 2024) and low legal protection (high strike costs, businesses can claim)。

These three things, this year simultaneously, have cracks。

THE PROSPERITY OF THE AI CHIP HAS MADE THE PROFITS OF SAMSUNG AND KK HERCULES COMPLETELY TRANSPARENT — EVERY QUARTERLY FINANCIAL REPORT, THE WORLD KNOWS HOW MUCH THEY EARN. THE NUMBER OF WORKERS IS THE BASIS FOR DEMAND. SK HERCULES EARNS MORE EACH SEASON THAN SAMSUNG DOES FOR SOME YEARS. THE WORKERS SAY, "I WANT 10%," AND MANAGEMENT DOESN'T HAVE THE CARD "THE COMPANY HAS NO MONEY."。

The yellow envelope came into force in March this year, changing the power comparison. This law broadens the definition of "employer" to the extent that there is "substantial control" over the working conditions of workers, even if there is no direct employment relationship. Within two days of the entry into force of the law, 100,000 sub-contractor trade union members submitted collective bargaining requests to the parent company. It also includes strikes against mass layoffs and factory closures. The best way for a company to suppress a trade union -- "If you want to strike, I'll shut it down" -- is legally invalid。

SK HERCULES IS THE THIRD PUZZLE. IT DID THE SAME THING BEFORE THE SAMSUNGS, BUT IT WAS NOT DEFEATED, BUT WAS MORE PROFITABLE, MORE TALENTED AND MORE PRICED. IT BREAKS THE MOST IMPORTANT PSYCHOLOGICAL DEFENCE OF THE FINANCIER: "NO ONE HAS EVER DONE THAT. "SOMEONE DID IT NOW AND DID WELL, AS OTHER UNIONS SAW。

The three variables are in place at the same time, not by coincidence, but by structure。

10.5% of the three stars is the starting point for others

The ink of the agreement was not dry, and trade unions everywhere had considered it a bottom line rather than a ceiling。

The trade unions of the five companies under Kakao's banner had joined forces to demand a profit of 13-15 per cent, which was one step higher than the Samsung, otherwise the collective strike was under way and the Labour Committee was using its good offices. LG Upulus and HD modern heavy work is more direct, with 30 per cent shouting, nearly three times the Tristar agreement. Samsung ' s own employees in the biopharmaceutical sector have been on strike for five days, demanding 20 per cent, and management has failed to allow them to enter a protracted war pattern by refusing to work overtime and not taking holiday classes。

THIS ROUND OF FOLLOW-UP UNIONS, ALL OF WHICH ARE NOT CHIP COMPANIES, HAVE NO PROFIT MARGINS LIKE SAMSUNG DS, BUT THEIR LOGIC IS: WHY CAN'T WE GET SAMSUNG

The financer's psychological defence was broken at the moment Samsung signed it。

More crucial changes are at the legal level. The yellow envelope law, which came into force in March this year, has largely closed the channels through which enterprises can sue strike unions for damages. In the past, the best way to suppress a trade union was by "You strike, I sue you, you dump your family." - There were trade unions that were awarded billions of won. Now this card doesn't work. The price for management to continue to be tough, from "union pays" to "both sides need to spend", is different。

Within two days of the entry into force of the law, 100,000 trade union members of sub-contractors across Korea submitted their application for collective bargaining to the parent company. The workers waited for this door for a long time, and it opened and couldn't be pressed。

Of course, the war is not a war of the warlords. The counter-arguments are supported in substance: the concessions of Samsung and KK Hercules are based on the unique background of the sharp rise in profits from AI; the profit base of Kakao, LG Upus, modern heavy work is not so strong, reaching the negotiating table, and the possibility of 30 per cent of claims falling is questionable. Samsung Biopharmaceutical Management has been on strike for five days, suggesting that not all financiers will follow Samsung's path。

Even if non-chip companies end up talking about 10 per cent, 15 per cent, instead of 30 per cent, that is the result of decades of history of Korean financiers。It is not the same thing that trade unions get 30 per cent, 15 per cent, and they can't get anything from the past。

The outcome of the Kakao negotiations is the first piece of proof of how far this story can go. If the settlement is concluded with any form of profit-sharing agreement, the "collective breach" of the purse is established; if the negotiations break down and the strike is pushed down, the Samsung will remain alone, and the fire will not be set on fire。

The market didn't see the most important one. Yes

The day the agreement landed, Samsung electronic stock prices rose by 8.5 per cent, a record high。

THE MARKET IS PRICED "ON STRIKE RISK CLEAR" — THE THREAT OF A CUTOFF FOR 18 DAYS HAS DISAPPEARED, THE PRODUCTION CONTINUITY HAS RECOVERED AND, IN COMBINATION WITH THE OPTIMISM OF THE DEMAND FOR THE AI CHIP BROUGHT ON BY THE STRONG BRITISH FINANCIAL PAPER, THE SAMSUNG IS JUSTIFIED TO RISE。

However, 10.5 per cent of long-term cost pressures have not been fully priced。

IF THE PACE IS MAINTAINED THROUGHOUT THE YEAR, THE BONUS POOL WILL BE CLOSE TO 20 TRILLION WON (APPROXIMATELY $14 BILLION). THE PARTIAL RELEASE OF THE MONEY IN THE FORM OF A COLLECTION UNIT EASED IMMEDIATE CASH PRESSURE, BUT THE DILUTION EFFECT OF THE STOCK WAS REAL AND THE EROSION OF EACH SHARE AND ROE OVER TIME WAS UNAVOIDABLE。

THE WATERSHED'S PROFIT GUIDE IN THE SECOND HALF OF THE YEAR. IF SAMSUNG DS ENTERPRISE H2 PROFITS REMAIN HIGH, THE MARKET WILL GRADUALLY ABSORB COST PRESSURES AND RE-PRICING HBM CATCH PROGRESS. IF THE RATE OF PROFIT INCREASES SLOWS AND THE COST OF BONUSES INCREASES, THE MEDIUM-TERM PRESSURE WILL BE MORE EVIDENT IN THE VALUATION。

KK HERCULES FACES THE SAME COST EQUATION, BUT ITS HBM TECHNOLOGICAL ADVANTAGE HAS LED TO STRONGER PRICING POWER, AND COST INCREASES HAVE BEEN COVERED BY HIGHER PROFITS – STILL THE MORE RESILIENT ONE IN THE SOUTH KOREAN CHIP PLATE。

There are three next targets: the Kakao negotiations, the first test of whether Domino can be established; the profit guide for the second half of the Samsung DS, which determines the actual cost of 10.5 per cent; and the strike on Samsung biopharmaceuticals, which represents the speed at which the system of financiers is relaxed。

Samsung's first shot. The bullet's gone. If the Korean financiers can hold their pockets, the answer will be in the next few weeks。