Samsung Slides From 299,500 Won, Leaving About 5 Million Retail Investors Fuming

Why Public Sentiment Turned Against the Union

Debate Over a Peak in Chip Profits Added to the Pressure

Criticism Intensified as the Stock Tumbled

Samsung Electronics Co.’s labor union failed to win broad public support for its demand for performance-based bonuses, and a key reason appears to be the sharp drop in a stock many investors had expected to reach 300,000 won. With the broader market already in a correction, the added risk of a general strike drew criticism from a wide swath of investors — from Samsung shareholders, who account for nearly 10% of South Korea’s population, to pension savers invested in semiconductor exchange-traded funds and other participants in the domestic stock market. The backlash drained momentum for a walkout.

Samsung had 4,605,714 shareholders as of the end of last year, according to the Korea Securities Depository. Of those, 4,195,927 were retail shareholders, the company’s annual report showed. With Samsung shares soaring from 119,900 won at the end of last year to the 290,000-won range recently, many new investors are believed to have entered the stock this year, likely lifting the shareholder base to about 5 million. That figure rises exponentially when indirect holders are included, such as investors in 221 ETFs that hold Samsung shares through retirement pension accounts and other vehicles.

As the union demanded bonuses based on the company’s large operating profit, shareholders grew increasingly alarmed about the risk of a stock decline. Samsung shares rose to 299,500 won on May 15, then fell sharply starting May 18. The selloff came as debate intensified in the US over whether global semiconductor profits had peaked, with strike risk at Samsung adding further pressure. On May 20, shortly after the union announced that negotiations had broken down, the stock dropped from the 280,000-won range to the 260,000-won range in a little over 10 minutes.

Many retail investors who joined the rally late fell into loss-making territory during the slide. On May 15, when the stock hit a record high, individual investors were net buyers of 2.87 trillion won ($2.08 billion) of Samsung shares. The same day, retail investors added another 79.9 billion won ($57.9 million) to TIGER Semiconductor TOP10, the largest semiconductor-themed ETF that includes Samsung.

The deterioration in sentiment toward semiconductor investments, triggered by Samsung’s decline, also dragged down shares of companies supplying materials, parts and chipmaking equipment. Hanmi Semiconductor fell 10% for three straight trading days. KODEX AI Semiconductor Core Equipment dropped 16.59%, while SOL AI Semiconductor Materials, Parts and Equipment slid 14.72%. The weakness also weighed on the Kospi, meaning the strike risk affected not only Samsung’s direct and indirect shareholders but investors across South Korea’s stock market.

Criticism has also remained intense over the lack of any shareholder voice in discussions on profit distribution. If a fixed portion of operating profit is paid out as bonuses, dividends available to shareholders could shrink. Based on last year’s dividend of 1,668 won per share, the current dividend yield has fallen to the 0.5% range. To bring that back to a more typical 2% level, the dividend would need to rise roughly fourfold. Investors worry that allocating a larger share of profit to employees would make that difficult.

Kang Jin-kyu