Samsung Electronics may face near-term pressure on earnings and its share price as labor tensions escalate, with a potential strike and large bonus provisions weighing on profitability, according to Citigroup.
In a report released April 30, Citi analyst Peter Lee maintained a “buy” rating on the stock but lowered the target price by 6.3 percent to 300,000 won from 320,000 won.
The revision reflects rising concerns that the company may need to set aside substantial provisions for performance-based bonuses amid intensifying labor disputes.
Lee estimated that if such provisions are factored in, Samsung’s operating profit for 2026 and 2027 could be revised down by 10 to 11 percent from previous forecasts.
Despite the near-term risks, Citi expects the broader memory cycle to remain strong, in line with market consensus. Demand continues to outstrip supply, with customers already placing advance orders for next year’s shipments.
Samsung’s high bandwidth memory business is also expected to post robust growth, driven by rising demand for artificial intelligence chips.
However, Lee cautioned that near-term earnings visibility remained limited, with labor risks emerging as a key variable.
The report also highlighted additional downside factors, including potential delays in mass production approval for next-generation products such as HBM4, pricing pressure from aggressive investment by competitors in memory and foundry sectors, and earnings headwinds from a possible strengthening of the Korean won.
Samsung Electronics’ labor union has demanded the removal of caps on performance-based bonuses and is calling for payouts equivalent to 15 percent of operating profit — estimated at around 45 trillion won.
The union has warned it will launch a full-scale strike from May 21 to June 7 if its demands are not met.
herim@heraldcorp.com
