Samsung Electronics Co Ltd (OTC:SSNLF) gained momentum early Thursday morning after the labor union put the planned strike on hold and is seeking a provisional wage deal with management to a vote. The electronic giant’s shares spiked in Seoul on Thursday (local time.)
This has eased concerns about the operations of the world's largest memory chipmaker and its potential ripple effects on the global economy.
Proposed Labor Deal
The 18-day strike, slated to begin Thursday and planned by nearly 48,000 union members, was canceled after last-minute negotiations between the South Korean chip maker and the union on bonus payouts, according to Reuters report. The deal will be put to a vote from May 22 to May 27.
The dispute stems from disagreements over profit distribution generated by the company on soaring demand for AI memory chips.
NH Investment & Securities analyst Ryu Young-ho said the canceled strike has improved investors’ sentiment, but the outcome might hurt the company's operating margins due to the need for additional provisions tied to higher labour costs.
Ryu also pointed to the company's approach to incentive pay, highlighting a proposal that would deliver performance bonuses in shares instead of cash. He said equity-based compensation can reduce the near-term cash impact compared with an all-cash payout.
Union leader Choi Seung-ho had earlier stated that the union had accepted a final proposal from the National Labor Relations Commission, but was having unresolved issues with management.
Samsung Growth Story
The South Korean tech giant delivered its strongest quarterly results with revenue climbing about 70% year over year, marking the company's highest-ever quarterly sales.
The company is benefiting from surging demand for advanced memory chips used in AI servers and hyperscale data centers, where supply shortages have significantly raised prices.
Samsung shares have soared 128% since the start of the year, pushing Samsung's market capitalization above $1 trillion.
Benzinga Edge Stock Rankings indicate that SSNLF has a Growth score in the 90th percentile with a strong price trend in the short, medium and long term.
Price Action: Samsung stock was seen trading 6.3% higher at KRW 293,500 ($195.17) in Seoul at the time of writing.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.
Photo Courtesy: Kittyfly on Shutterstock.com
Login to comment