SK Hynix's Workforce Rejects Share-Based Bonus Plan by a Razor-Thin Margin

SK Hynix's wage deal rejected by 25 votes, shifting bonus to stock. Record Q2 profits and global expansion continue amid labor tension.

The narrowest of majorities has thrown SK Hynix's labour relations into flux. Out of 15,045 ballots cast on Tuesday, 50.08 percent voted against a previously negotiated wage and benefits package — a defeat sealed by just 25 votes. The rejection scuttles a deal that would have raised salaries by 6.3 percent while fundamentally restructuring how profit-sharing works at the memory chip giant.

At the heart of the dispute lies a proposed shift in compensation mechanics. Under the agreement reached on August 20, employee bonuses would have been paid 40 percent in cash and 60 percent in company stock, replacing the current all-cash structure. For a workforce riding the wave of record earnings, that conversion represented a substantial concession — one that a slim majority ultimately deemed too costly. With no fresh negotiation date set, management and union representatives now return to the table under a cloud of unresolved tension.

Record Results Raise the Stakes

The timing sharpens the stakes. SK Hynix's second-quarter report, released July 29, showed revenue of 79.3 trillion won — up 51 percent quarter-on-quarter and 257 percent year-on-year — alongside an operating margin of 76 percent, both historic highs. Operating profit reached 60.5 trillion won, propelled by sharply higher DRAM and NAND prices and the initial production ramp of HBM4 memory.

Those figures cut both ways. They underscore the company's capacity to fund generous compensation, yet they also explain why workers might resist trading cash for equity: with the stock still trading well below its recent averages, the perceived value of share-based pay is harder to defend. The failed ballot suggests the workforce sees the balance between corporate success and employee participation as still unresolved.

Capacity Expansion Proceeds on Multiple Fronts

Labour friction has not slowed the company's manufacturing ambitions. SK Hynix announced last Monday that it would restart its second NAND flash fab in Dalian, China, after a four-year hiatus. Equipment installation for the new line begins in November, with mass production targeted for the first half of 2027. The facility will add roughly 50,000 wafers per month, lifting total Dalian output from 100,000 to 150,000 wafers monthly — an increase of about 50 percent.

The strategy is deliberately two-tracked. The Chinese operation will focus on mature 100-layer NAND using floating-gate architecture, while South Korea handles advanced variants exceeding 300 layers. This division keeps cutting-edge technology closer to home while leveraging China's existing infrastructure for legacy products.

Separately, SK Hynix is exploring its first Japanese manufacturing site in Miyagi Prefecture, according to a Hankyoreh report. Investment figures and timelines remain undisclosed, though Reuters has suggested a potential outlay in the tens of trillions of won. A Japanese entry would extend the geographic diversification already underway through massive domestic projects: the Yongin Y2 and Cheongju M17 fabs, approved in early August, carry a combined budget of 54 trillion won and will deliver their first cleanrooms in 2028 and 2029 respectively.

Market Position Remains Unsettled

The stock closed Wednesday at 1,688,000 won, up 0.6 percent from the prior session's 1,678,000 won. The weekly gain stands at 13 percent, though the shares remain 7.0 percent in the red on a monthly basis and trade 15 percent below their 50-day average of 1,979,300 won — a sign that recent volatility has yet to fully subside.

The capital return programme announced roughly two weeks ago — a 40 trillion won buyback followed by the cancellation of approximately 3.3 percent of outstanding shares — has contributed a 12.2 percent gain since its unveiling. The 54 trillion won investment plan for new fabs has added 18.7 percent over a slightly longer window. Those catalysts are now largely priced in, leaving the wage dispute and capacity announcements to drive near-term sentiment.

Industry tailwinds remain robust: Gartner projects global semiconductor revenue to reach $1.6 trillion in 2026, up from $809 billion the prior year. That growth outlook only intensifies pressure on SK Hynix to find a compensation formula its employees will accept — and to do so before the next earnings cycle reframes the debate.