SAMSUNG Electronics workers are expected to walk off assembly lines on Monday (Jul 8), beginning the biggest organised labour action in the South Korean conglomerate’s half-century history.
The largest union at the nation’s biggest company has spent the past few weeks preparing for the three-day walkout after negotiations over pay and vacation time collapsed last month. This envisioned action marks an escalation from a single-day strike in early June – the first in Samsung’s 55 years of existence. It’s intended to send a message by disrupting production at one of the company’s most advanced chip facilities, union leaders say.
The labour union aims to gather up to 5,000 people for rallies outside Samsung’s semiconductor plants in Hwaseong, about 38 kilometres south of Seoul, at 11 am on Monday, Lee Hyun-kuk, deputy secretary-general of the union, told Bloomberg News on Friday. It’s unclear how many workers will actually walk off the job, and markets have so far remained calm. Still, the risk is that the unprecedented action at Samsung may hurt the country’s best-known and wealthiest corporate name – and spur similar responses across the tech industry.
“Our goal for this walkout is to disrupt production,” said union leader Son Woo-mok.
For Samsung, it can ill-afford turmoil within its ranks – or production snarls – at a critical time. It’s now pulling out the stops to convince Nvidia to use its high-end AI memory chips – a prerequisite for staking a larger claim on a booming AI market. In May, it abruptly replaced the head of its semiconductor division, which since 2023 has seen SK Hynix dominate the crucial high-bandwidth memory, or HBM, chip arena.
This week, Samsung is preparing to unveil new foldable phones and watches as well as a smart ring in Paris ahead of the Olympics, in an attempt to forestall a challenge from Apple on its global market lead. In Samsung’s favour however is an anticipated rebound in global memory and electronics demand from historic post-Covid era depths: the company on Friday posted a 15-fold surge in earnings, but off a very low 2023 base.
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Representatives for Samsung declined to comment on Friday.
“The timing of this strike is particularly critical as it coincides with ongoing semiconductor supply chain challenges,” said Billy Leung, an investment strategist at Global X Management, a member of the Mirae Asset Financial Group. Samsung accounts for about 20 per cent of the global Dram market and around 40 per cent of Nand flash, which is used in smartphones and servers. “Any disruption in Samsung’s operations could have a ripple effect.”
Samsung Electronics has long avoided the kind of ground-up turmoil that’s plagued many of Korea’s leading companies from Hyundai Motor to Ssangyong Motor. Labour action in the past has occasionally turned violent. Analysts have credited Samsung’s tight control of labour activism as a reason for its success, helping the company dominate the electronics sector from its perch in Suwon for well over a decade. Lee Kun Hee, late chairman of Samsung and father of current leader Jay Y Lee, went to great lengths to prevent unions from forming.
Now, the National Samsung Electronics Union – the largest of the tech giant’s several unions with some 28,000-plus workers – says it’s escalating things because of a breakdown in pay talks, after initially seeking a less dramatic resolution.
Union leaders spent weeks encouraging members to join in the impending manoeuvre. Samsung on Thursday tried to deflate that endeavour by announcing first-half performance-related bonuses for semiconductor staff, but the maximum 75 per cent of monthly salaries they promised fell short of a full month’s payout typical in the past.
At the heart of the dispute now are higher wages and additional paid leave for the 28,000-plus union members. Union leaders last week changed their demands to include the entire cohort after initially saying they wanted a bigger salary increase for around 855 staff who did not agree to a 3 per cent annual basic pay hike.
Other issues include bonuses tied to Samsung’s excess profit, which chip workers did not receive last year when their unit lost about 15 trillion won. They fear they may get left out again this year even if the division returns to profit, according to union leaders.
Samsung calculates those bonuses via a complex formula that deducts the cost of capital from operating profit, adjusted for taxes on a cash basis. The union said it’s asking the company to simply use operating profit like some of its peers – or to be more transparent in how it determines those numbers.
Historically, bonuses make up a significant portion of worker pay, so missing out can mean a meaningful reduction in compensation. BLOOMBERG
