Samsung Electronics workers are set to reap bigger bonuses from record AI profits

Samsung Electronics is reaping remarkable profits from the AI boom. The semiconductor division that makes memory chips critical to AI systems posted record earnings during the first quarter of this year, the company announced April 30. Samsung’s net profit soared to the equivalent of $31.72 billion that quarter, a 474% increase from the year prior, according to the Wall Street Journal.

But Samsung workers aren’t getting an adequate share of these profits, they recently argued. In order to avert a strike, Samsung agreed to give certain employees in the chipmaking division bigger bonuses.

The deal speaks to the growing dichotomy between corporate profits and employee earnings, which is now being intensified by AI.

Why Samsung workers wanted a bigger piece of the AI pie. Some 48,000 unionized Samsung workers in South Korea were set to go on strike for 18 days over concerns about their bonuses. The union took issue with a cap that limited employees’ bonuses to 50% of their annual salaries, as well as a system that dedicated 15% of Samsung’s annual operating profit to a pool for worker bonuses.

Samsung averted this strike at the last moment, agreeing to a deal with the workers on May 27. Under the deal, Samsung will earmark 10.5% of the operating profits from its semiconductor unit for bonuses that will go specifically to the workers in that division, Reuters reported. If eligible employees meet certain targets, they could earn bonuses equivalent to about $400,000, according to the Wall Street Journal.

Still, not all Samsung workers are happy about the deal, which also removes caps on individual bonuses, the New York Times reported. A smaller group of workers in the consumer electronics division didn’t participate in negotiations, and are set to get smaller payouts than their peers in the semiconductor unit.

Profits >> earnings. The debate over bonuses at Samsung speaks to employees’ concerns about the widening gap between corporate profits and worker earnings. Corporate profits now represent 12.1% of US gross domestic income, according to the US Bureau of Economic Analysis, the highest share since the early 1950s.

AI could make the gap even worse, Nicole Bachaud, labor economist with ZipRecruiter, said.

“It’s gonna create an even more dichotomous system, where the wealthy get even wealthier, and…low income households are going to continue to see less and less of those gains,” she said. “That’s a challenge for businesses that they should be thinking about.”

Employers may lean even further into variable pay, such as performance-based bonuses, as they pivot to focus on AI, Ruth Thomas, chief compensation strategist with Payscale, predicted.

“If we look into the US environment, what we’re seeing is a lot of these large AI companies are really rewarding people with stock, so they’re rewarding them with the future promise rather than committing cash now,” she said.

While the Samsung example was one in which workers had a considerable amount of leverage, generally employers still have the upper hand in the US market, Thomas said. This means they’re more likely to reward employees with bonuses, rather than higher base pay, she added.

“That’s the lever to be able to attract talent, retain talent, motivate talent in that environment,” she said.