Samsung Strike Urgently Halted by Court, Stock Price Stages V-Shaped Reversal From Falling Over 9% to Rising 6%

TradingKey - During the Asian trading session on May 18, global memory chip giant Samsung Electronics' planned 18-day general strike was abruptly halted by a court order three days before its scheduled start.

On May 18, the Suwon District Court in South Korea approved a provisional injunction filed by Samsung Electronics, ruling that the labor union must maintain normal production manpower, operating hours, and production scales even during labor disputes, with violators facing daily penalties of up to hundreds of millions of won. Yonhap News Agency noted that this ruling effectively slammed the brakes on the largest planned strike in Samsung's history.

Markets reacted swiftly; KOSPI 200 futures plummeted nearly 5% in early trading, triggering a circuit breaker before the court injunction was issued, then staged a rapid V-shaped recovery to close up 0.77%.

Samsung Electronics' share price tumbled over 9% in pre-market trading before rebounding sharply into the green, with intraday gains widening to 6% at one point before closing up 3.88%. Simultaneously, SK Hynix reversed a nearly 5% decline to gain over 4%, as panic over potential memory chip supply disruptions significantly eased.

[Samsung Share Price Trend, Source: TradingView]

As the strike crisis was temporarily defused, multiple parties intervened quickly. Management and labor initiated a second round of mediation on the morning of May 18, Chairman Jay Y. Lee returned early from Japan and issued a public apology, and Prime Minister Kim Min-seok warned that the government would not rule out exercising emergency adjustment powers if the strike caused significant economic damage.

The core conflict of this standoff lies in bonus distribution. Samsung's first-quarter operating profit reached a record 57.2 trillion won, a staggering 756% year-on-year increase, yet employees are unable to share the full dividends due to a bonus cap. The union is demanding the abolition of the 50% annual salary bonus cap and for 15% of operating profit to be allocated for performance bonuses. However, Samsung only agreed to provide 10% and replace institutional reform with a one-time payment, which the union rejected.

Competitor SK Hynix abolished its bonus cap last September, fixing 10% of operating profit for employee bonuses; the resulting bonus gap between the two companies has further amplified employee dissatisfaction.

Nevertheless, risks remain. The union stated it would respect the court's decision, but the original strike schedule is still proceeding. Although the injunction restricts disruptive actions like work stoppages, employees could still exert pressure through legal means such as reduced attendance and refusal to work overtime, which could impact deliveries and customer confidence.

The market is closely monitoring the outcome of the second round of mediation on May 18. Should these talks collapse again, the likelihood of the South Korean government invoking "emergency mediation powers" is increasing, which would force both management and labor into compulsory arbitration.