Samsung Recaptures DRAM Crown Amidst Rising Labor Costs and Union Tensions
Samsung Electronics has regained its position as the world’s leading DRAM manufacturer, fueled by strong sales of High Bandwidth Memory (HBM) and high-value DRAM products. Though, this resurgence is shadowed by escalating labor costs and intensifying disputes with its labor unions, raising concerns about potential internal disruptions.
DRAM Market Dominance Restored
Samsung’s DRAM revenue reached $19.156 billion (approximately 27.7 trillion Korean Won) in the fourth quarter of last year, a remarkable 40.6% increase from the previous quarter. This performance translated to a market share of 36.6%, surpassing SK Hynix’s 32.9% and reclaiming the top spot after a year. The company is now focused on solidifying its leadership in the next-generation HBM4 market.
The turnaround is attributed to the ramp-up of HBM3E production and increased sales of high-capacity DDR5 and low-power, high-performance D램 (LPDDR5X). Average selling prices (ASPs) also rose by around 40%, driven by a shift towards server-focused products and overall market price increases.
Record Profits Forecast, But Internal Challenges Loom
Analysts predict a strong year for Samsung and SK Hynix, with Morgan Stanley forecasting operating profits exceeding 245 trillion and 179 trillion Korean Won, respectively. These figures dwarf Samsung’s previous record of 58.9 trillion Korean Won in 2018.
Despite the positive outlook, Samsung faces mounting internal pressures. Employee compensation has surged to an all-time high, with the average annual salary estimated at 158 million Korean Won – a 20% increase from the previous year. This rise in personnel costs is placing a strain on the company’s financial performance.
Labor Disputes Escalate
Negotiations for the 2026 wage and collective bargaining agreement have stalled, leading to increased tensions between management and labor. The primary point of contention revolves around the formula for calculating the ‘overachievement profit sharing’ (OPI) bonus. Unions are demanding a larger share of profits, with some advocating for a system similar to SK Hynix, which eliminated bonus caps and allocated 10% of operating profit to performance-based rewards.
Samsung’s management has proposed a more conservative approach, citing global uncertainties and fixed cost burdens. A revised offer to link bonuses to achieving domestic market leadership in the semiconductor (DS) sector was rejected by the unions, who have initiated formal dispute proceedings with the Central Labor Committee.
The Impact of a Newly Empowered Union
The emergence of a majority union at Samsung – a first in the company’s history – adds another layer of complexity to the situation. The combined strength of the various unions represents over half of Samsung’s workforce. A potential strike by the largest union, the ‘Super-Enterprise Labor Union Samsung Electronics Branch’, could significantly disrupt production.
Industry observers warn that excessively generous performance-based bonuses could reduce investment capacity, particularly given the cyclical nature of the semiconductor industry. Finding a sustainable balance between rewarding employees and maintaining financial flexibility is crucial.
FAQ
Q: What is HBM?
A: High Bandwidth Memory is a high-performance RAM interface used in applications requiring high data transfer rates, such as GPUs and AI accelerators.
Q: What is the OPI bonus?
A: The Overachievement Profit Sharing bonus is a performance-based reward distributed to employees when the company exceeds its profit targets.
Q: What is the current status of the labor negotiations?
A: Wage negotiations have broken down, and the unions have filed for dispute resolution with the Central Labor Committee.
Q: What are the potential consequences of a strike?
A: A strike could disrupt production and impact Samsung’s ability to meet market demand.
Did you grasp? Samsung Electronics had not been overtaken in the DRAM market for 33 years prior to 2025.
Pro Tip: Keep an eye on the evolving dynamics between Samsung and its labor unions, as this could significantly impact the company’s future performance and investment strategies.
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