South Korea’s labour minister has called on the country’s major tech firms to share the spoils of their massive windfall profits, warning that unprecedented chip-sector gains stemming from the AI boom risk widening inequality.

In an interview, Kim Young-hoon told reporters that companies like Samsung Electronics that outperform profit targets should consider sharing excess gains with suppliers, subcontractors and workers, after deducting taxes, given their contributions to corporate growth.

The South Korean government, businesses, unions and suppliers should engage in public dialogue on how to share such “excess profits” and narrow the gap between large conglomerates and smaller suppliers, he said.

Kim, a former labour activist appointed by left-leaning President Lee Jae Myung, helped broker a last-minute pay deal between Samsung and its union that averted a major strike and delivered hefty bonuses to memory-chip workers.

His distribution proposal, made in his first interview with foreign media since the Samsung deal, points to some of the unusual ideas top South Korean policymakers are considering as they grapple with the massive windfall from the global AI boom.

“We should set new rules for distribution through social dialogue,” Kim said. “It is undeniable that Samsung’s remarkable achievements are the result of the dedicated efforts of labour and management.

But there are also 1,700 suppliers, as well as contributions from local communities, including the supply of water and electricity.”

Profits Soar As AI Demand Surges

Profits for Samsung and peer SK Hynix have soared as rising AI adoption stoked demand for memory chips. Samsung has agreed to give special bonuses to employees if it achieves more than 200 trillion won ($129.3 billion) in annual operating profit from 2026 to 2028.

Kim first raised the idea of a public dialogue on excess corporate profits in late May and has since said he plans to host a forum on the matter.

Reinvestment, Not Communism

Kim has been criticised by South Korea’s conservative opposition People Power Party, which said he had raised “a dangerous idea of state intervention that undermines the foundation of the free-market economy.”

Kim rejected the claim that his proposal amounted to “communism,” saying it would represent reinvestment in the supply chain, improve competitiveness and help South Korea overcome its low-growth challenges.

“What I mean by distribution is sharing profits with suppliers. This is clearly reinvestment,” he said. Kim suggested adjusting contract prices for suppliers as one possible approach and said such profits could also be invested in talent at smaller companies.

South Korean job seekers prefer large conglomerates like Samsung over smaller firms because of wage gaps and benefits — a divide expected to widen as workers at big companies receive hefty AI-driven performance bonuses.

South Korea’s income gap between the bottom and top 20% of households widened by the most in six years in the first quarter, government data showed.

“This is worrisome,” Kim said, adding that worsening inequality would curb growth in Asia’s fourth-largest economy.

A high-ranking South Korean policymaker also suggested last month paying citizens a “dividend” using excess tax revenue from AI profits.

Samsung Strike Averted

It is rare for a South Korean labour minister to intervene in negotiations between companies and unions.

Kim said he had done so at the request of both Samsung management and the union after talks repeatedly broke down, threatening an 18-day strike that could have badly hurt South Korea’s economy and stock markets.

Both sides lacked experience in such negotiations, Samsung had long maintained a no-union policy, and figuring out how to share unprecedented profits among different stakeholders within the company proved a daunting challenge.

“I told President Lee that I would leverage my background as a senior figure in the labour movement to build a relationship with them,” Kim said.

Analysts have said the Samsung deal could embolden unions at other companies also demanding better remuneration. Kim said he did not want to be involved in every negotiation, which is why he believes a broader framework is needed to aid union-company talks going forward.

Challenges Ahead For Samsung

Challenges remain for Samsung, however. Management must address internal discontent over the pay gap between its memory-chip and non-memory-chip divisions, which could lead to defections among some foundry workers.

“Of course, there must be rewards for short-term performance,” Kim said. “However, the company also needs to invest in and motivate strategic talent over the mid-to-long term.”

(with input from Reuters)