The Dilemma and Way Out of a Chaebol Heir
If Lee Jae-yong really had absolute power in South Korea as some claim on the simplified Chinese - language Internet, he'd probably wake up laughing in his dreams.
In reality, even as the chairman of Samsung, Lee Jae - yong can neither control the business world nor influence the presidential office. He can't even "handle" the labor union within the company. To quell the strike, he urgently interrupted his overseas trip and returned to South Korea. He immediately apologized to global customers and declared, "It's all my fault." Domestically, he tried to win over employees by referring to Samsung as a "big family." He showed great flexibility, far from the domineering image of a chaebol in the rumors.
As a business operator, he still has to defend the interests of shareholders. While trying to win over employees with an emotional approach, he firmly refused to institutionalize the fixed - proportion dividend of operating profits. However, he also knew that money had to be spent. Eventually, just a few hours before the strike was about to break out, he avoided long - term constraints on the company's management rights by setting up a one - time "semiconductor special performance bonus" with no upper limit.
Seeing that Lee Jae - yong was open to negotiation, the South Korean government also played an active role. It was the mediation of South Korean Labor Minister Kim Young - hoon that brought the labor and management back to the negotiation table, and they reached a preliminary salary agreement late that night. This internal vote will be held from May 22nd to 27th. Choi Seung - ho, the chairman of the Samsung labor union, said he expected the members to approve the agreement and promised to "do our best to stabilize the labor - management relationship at Samsung Electronics" in the future.
An imminent labor - management storm was temporarily resolved through the mediation and compromise of all parties. Now we just need all parties to sign and formalize the agreement. The South Korean capital market has already digested the impact of this storm, giving a positive evaluation from a capital perspective.
After all, Samsung is the most important growth engine and ballast stone of the South Korean economy, and also the most important heavy - weight stock in the South Korean stock market. Its stability not only directly affects the South Korean economy but also impacts the stability of the global semiconductor supply chain. The market is hungry for memory chips. As long as an agreement can be reached and chip production and delivery are normal, the market doesn't care if employees take a little more profit.
South Korea today is no longer the era of Park Chung - hee when the Blue House had absolute power; Samsung is no longer what it was in the era of Lee Kun - hee when chaebols could do whatever they wanted under the protection. In this strike, the compromise and balance among all parties are the real face of South Korea today.
The chaebol empire that is described as all - powerful and having absolute say in simplified Chinese narratives has actually been reshaped repeatedly during the 1997 financial crisis, the 2008 global recession, and subsequent social waves. What remains is a Samsung that is deeply bound by globalization, constantly pulled by geopolitics, and continuously questioned by domestic populism and labor rights awareness.
Samsung still holds an "too big to fail" position in South Korea, but it's not solely up to the Lee family. It has become the center of a storm of games among various parties: politicians need votes, the media chases traffic, the labor union holds the right to strike, and the public can easily put "Samsung Republic" on the hot search on social platforms. The only thing Lee Jae - yong can rely on is Samsung's irreplaceable position in the global supply chain.
So, on the surface, this strike is about the labor and management dividing the money. In fact, South Korean society is using Samsung as an experiment to ask an old question: When the dividend period of the "Han River Miracle" completely ends, how should the fruits of growth be divided? In the past, this question was suppressed, covered by export - oriented growth, and resolved by the collective identity of "Samsung is South Korea." Now, these three conditions no longer exist. The public still cares about Samsung's stock price, but no longer blindly worships the chaebols.
So we saw a highly symbolic scene: the South Korean president came out to issue a warning, the labor minister personally mediated, the labor union chairman softened his stance on the eve of the strike, and the chaebol leader bowed and apologized in front of the camera. No one is an absolute strong - hand, and no one is a complete loser. This is a typical feature of a multi - party game, where power is dispersed, interests are pulled, and the outcome is bound to be compromise rather than suppression.
The "positive evaluation" from the market is less about trust in Samsung and more about recognition of this compromise mechanism, which is exactly what Samsung and even the whole of South Korea need most now.
01
As a key player in the AI supply chain, Samsung has taken the center stage in this wave of technological innovation. With the official supply of HBM4 memory to NVIDIA and the continuous rise in the prices of DDR5 and enterprise - level SSDs, in May, Samsung Electronics presented a report card that made both insiders and outsiders in the industry envious.
In the first quarter of 2026, Samsung Electronics' revenue reached 133.87 trillion won, a year - on - year increase of 69.16%; operating profit was 57.23 trillion won, a year - on - year surge of 756.10%. Both core indicators refreshed the single - quarter historical records, and the profit in the first quarter of 2026 exceeded the total for the whole year of 2025.
After the release of the financial report, Samsung's stock price soared, breaking through the one - trillion - dollar mark for the first time and becoming the second Asian company after TSMC to reach this milestone. Thanks to Samsung's excellent performance, the Korea Composite Stock Price Index (KOSPI) successively broke through the 6,000, 7,000, and 8,000 - point marks.
However, before the ink on Samsung's most brilliant financial report in history had even dried, the largest - scale strike action was on the verge of breaking out. In Samsung's current performance bonus system, there is an upper - limit indicator, and the bonus cannot exceed 50% of the annual salary. This red line drawn more than twenty years ago was intended to keep employees' income relatively stable. It had been operating smoothly and was one of the cornerstones of Samsung's stable development for many years.
However, the wave of AI demand has brought huge excess profits. The sudden windfall has not only made people envious but also been further stimulated by the changes in its competitors. In September 2025, SK Hynix and its labor union re - signed a labor - management agreement, abolishing the bonus cap and instead including 10% of the annual operating profit in full into the employee performance bonus pool.
Both being major South Korean semiconductor manufacturers and riding on the AI wave, under different systems, the bonuses of Samsung's chip department employees are less than one - third of those of their counterparts at SK Hynix. This huge gap has led hundreds of Samsung engineers to jump to SK Hynix recently.
In order to fight for more benefits, in March this year, the workers of the Samsung Electronics labor union voted to authorize a strike. Since the labor union and the management have not made substantial progress on key terms for a long time, the Samsung labor union announced that it would launch an 18 - day comprehensive strike on May 21st, with the number of participants expected to exceed 50,000.
The semiconductor manufacturing process consists of a series of irreversible precise chemical and physical reactions, and each process must run continuously. Once the production line stops for more than the critical time, all the wafers being processed on the line will be scrapped, and restarting the line will require several days of calibration and debugging.
The research of the Bank of Korea shows that the direct loss of a one - day shutdown of Samsung's factory is as high as 1 trillion won. The direct and indirect economic losses of a full - scale strike are expected to be between 40 trillion and 100 trillion won, which will cause the South Korean economic growth rate to drop by 0.5 percentage points this year.
Such a lose - lose result is of course unacceptable to the South Korean government. As a president from the progressive camp, Lee Jae - myung should have been a natural ally in this strike for labor rights. However, as the president of South Korea, he must also maintain the country's economic stability. This dual identity has made him ultimately play a role of a "balancer" that seems contradictory but is actually full of political considerations.
Lee Jae - myung first shifted the focus of the debate from "labor - management distribution" to "profit ownership," emphasizing that shareholders "invest by taking risks and bearing losses" and should naturally enjoy the profits. It is "hard to understand" logically for the labor union to directly take a fixed proportion from the pre - tax operating profit. Then he elevated the individual case to national economic security, warning that the Samsung strike might have the "effect of increasing corporate tax" and weaken the country's competitiveness, defining a labor - management dispute of an enterprise as a possible systemic risk.
This led South Korean Prime Minister Kim Min - sik to announce that to protect the national economy, all feasible means, including the exercise of the emergency adjustment power, would be taken. The "emergency adjustment power" is the highest - level labor - management intervention measure of the South Korean government. Once activated, the labor union must immediately stop the dispute for 30 days and accept compulsory arbitration. In terms of the judiciary, the Suwon District Court in South Korea set a red line for the strike, ordering the labor union to ensure that the upcoming comprehensive strike "does not affect production."
Lee Jae - yong also made a timely statement, appealing to the labor union and the company to unite during his public apology. "Dear Samsung members, we are a family. It's time to move in one direction."
The mild statements of all parties laid the foundation for the peaceful resolution of this labor - management distribution dispute.
02
In the past, this would have been unimaginable.
Lee Byung - chul, the founder of Samsung, started from scratch and went through many hardships. He advocated hard work and an iron - fisted approach. Lee Kun - hee, the second - generation leader who took over Samsung, also continued his father's policy of "operating without a labor union." Although he improved employees' treatment, he refused to recognize the legitimacy of the labor union. He handled the first labor union strike at Samsung Electronics in 1999 toughly by closing the factory and having management take over the positions. After that, Samsung avoided the labor union by providing top - notch salary and benefits in the industry.
However, with the change in the labor - management environment in South Korea and the expansion of the company's scale, the first labor union under Samsung Electronics was officially established on November 16, 2019. At that time, Lee Jae - yong did not publicly congratulate or support it. Samsung only officially stated that it "respected employees' rights." That day marked the end of Samsung's "operating without a labor union" era and also the complete end of the "iron - fisted governance" era of South Korean chaebols.
With the economic transformation in South Korea, the influence of labor unions in traditional industries has been declining, but the white - collar labor union movement led by the MZ generation (Millennials and Generation Z) is rising rapidly and has become the core force in reshaping the labor - management landscape. The MZ generation has three major demands: First, fair profit - sharing: They are no longer satisfied with a fixed salary but require that their compensation be directly linked to the company's performance, especially in high - tech enterprises. Second, work - life balance: They actively strive to improve the comprehensive wage system, expand remote work, and shorten working hours. Third, refusal to blindly sacrifice: They have a lower loyalty to the enterprise, pay more attention to personal rights, refuse to blindly sacrifice, and cannot accept the "PUA" - style management in the name of the "wolf culture."
If the South Koreans of the "Han River Miracle" era were hard - working, emphasized discipline, and obeyed the "patriarch," then the MZ generation is obviously completely different.
The office employees of SK Hynix established the earliest white - collar labor union in South Korea in 2018. It was the labor union's collective bargaining power that reached an agreement with the employer, promising to distribute 10% of the company's operating profit as an unlimited bonus pool to employees. This "sky - high year - end bonus" caused a huge shock in South Korean society, directly bringing a strong sense of "deprivation" to employees of other companies in the same industry and quickly triggering a wave of imitation.
The Samsung Electronics labor union just followed the example of its peers. In July 2025, the main labor union of Samsung, the "National Samsung Electronics Labor Union," announced a general strike, with demands including salary increases and more paid annual leave.
However, different from SK Hynix, which focuses on semiconductors, Samsung is a giant spanning multiple industries. Although the Samsung Electronics department has seen a sharp increase in profits, it also needs to achieve a balance of interests among various business segments within Samsung.
On May 20th, when the post - labor - management mediation at Samsung Electronics broke down, Samsung stated externally that the labor union insisted on demanding performance bonuses for loss - making departments that were unacceptable to society. It is reported that the leader of the Samsung labor union directly questioned, "If employees in the storage department get 500 million won and those in the foundry department only get 80 million won, who will be motivated?"
The preliminary agreement finally reached this time also made a breakthrough on this key obstacle. According to Choi Seung - ho, the two sides have reached an agreement on the profit - distribution plan for loss - making business departments. This means that both the labor and management have made substantial concessions.
This is quite remarkable. After all, although the storage business is currently booming, consumer electronics and chips are strong - cycle industries driven by supply - demand relationships, and the profit fluctuation range is extremely large. If the unlimited distribution rule becomes the norm, when the next industry trough comes, the company may be dragged into a quagmire of huge losses by labor costs.
Jeong Kye - hyun, the former president of Samsung's semiconductor department and now a resident advisor, has a deep understanding of this. When he attended the forum of the Korean Academy of Engineering on May 18th, he issued a warning: As Chinese manufacturers Changxin Memory and YMTC accelerate their production expansion, if the new supply comes on stream from the second half of 2027 to 2028, the supply - demand pattern of the storage market may change rapidly. The turning point may come as early as the second half of 2027 or as late as the first half of 2028.
At the same time, there is also uncertainty in AI capital expenditure. If technology giants find that the return on AI investment is lower than expected, they may reduce their investment. After 2028, not only will the storage market be under price pressure, but the demand itself may also start to shrink. For this reason, Samsung's management dare not easily abandon the "safety belt" in the bonus system. Once the industry experiences a cyclical reversal, the unlimited distribution rule will drag the company into the abyss.
So, Lee Jae - yong's anxiety is not unfounded. People in different positions see different things. Employees see the excess profits, while the management sees the brewing storm in the distance amidst the excitement.
According to informed sources, at the company's internal seminar at the beginning of this year, Lee Jae - yong warned the participants not to indulge in the joy of short - term performance improvement but to intensify efforts to rebuild Samsung's technological competitive advantage. He specifically mentioned the "sandwich crisis" theory put forward by his father, Lee Kun - hee, in 2007.
At that time, Lee Kun - hee believed that the South Korean economy was being sandwiched between Japan, which had a leading technological level, and China, whose competitiveness was rapidly improving. Lee Jae - yong further emphasized that South Korea has never escaped the "sandwich situation," and the change lies in the changed competitive landscape, which is more severe.
03
Samsung Electronics has sufficient technological and financial strength to hold an important position on the global semiconductor stage. However, as a South Korean enterprise, the fate of Samsung Electronics has always been hanging on uncontrollable external variables.
According to the financial report, in Samsung Electronics' consolidated revenue of 333.6 trillion won in 2025, overseas revenue accounted for more than 70%. Among them, the US market accounted for 39.9%, and the Chinese market accounted for 14.2%. The combined share of these two major markets exceeded half. The revenue in the "home country" region where South Korea is located was only 46.64 trillion won, accounting for only 13.98%. Both technology and the market are external.
Among them, the semiconductor department is the real profit engine of Samsung Electronics and even the entire Samsung Group. In 2025, the operating profit of this department reached 24.9 trillion won, accounting for more than half of the overall profit. In the first quarter of 2026, this characteristic of "relying on the semiconductor sector alone" became even more extreme. The operating profit of the semiconductor department was 53.7 trillion won, almost accounting for all the profit, while the consumer electronics business has long hovered around the break - even point.
In May this year, Samsung Electronics officially stopped selling TV sets, monitors, refrigerators