Samsung Electronics and its unions failed to reach a deal on Wednesday, leaving a threatened 18-day walkout set to begin on Thursday.

Last-ditch government-mediated talks collapsed today (20 May), leaving an 18-day strike at the world’s biggest memory chipmaker set to begin Thursday. As Silicon Republic reported on 18 May, Samsung Electronics and its unions entered what Prime Minister Kim Min-seok described as a final round of negotiations to avert a walk-out by over 45,000 workers.

The unions had accepted the National Labor Relations Commission’s mediation proposal, but Samsung rejected it, according to CNBC, with shares falling by 4.4pc in Seoul on the news, says Bloomberg.

Samsung Electronics said it “deeply regrets” the breakdown in talks, in a statement published by Korean financial outlet Money Today. “Samsung Electronics deeply regrets that the post-mediation process has ended,” the company said, adding that it “will not give up on dialogue until the last moment”.

The dispute centres on Samsung’s performance-based bonus system. The union is seeking bonuses equivalent to 15pc of operating profit, the removal of a cap limiting payouts to 50pc of base salary, and formal multi-year contractual guarantees. Samsung has consistently refused to meet those demands in full.

The economic stakes remain huge. Prime Minister Kim Min-seok had estimated direct strike losses at 1trn won ($664.7m), potentially rising to 100trn won if chip production disruptions force Samsung to scrap wafers already in production.

Officials have so far declined to invoke emergency arbitration powers – which could suspend the strike for up to 30 days – with the labour commissioner saying mediation could restart “anytime”, according to Reuters.

A court injunction requires safety and facility staffing to remain at normal levels during any industrial action, which is expected to limit the immediate production impact.

The company accounts for 22.8pc of South Korea’s exports and revenue equivalent to 12.5pc of GDP. With talks now over and the strike set to begin Thursday, attention turns to whether Samsung management will make a fresh approach to the unions tonight – or whether the government will finally reach for its emergency powers.

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