South Korea’s Samsung Electronics Co’s largest labour union of more than 30,000 workers declared an indefinite strike, a surprise move that raises the risk of production disruptions at the world’s largest memory chipmaker.
The union’s call for a general strike sharply escalates a dispute with South Korea’s biggest company. Thousands of workers rallied earlier this week outside Samsung’s chipmaking complexes south of Seoul to kick start what originally was a three-day walkout demanding better pay.
It’s the largest organised labour action in the South Korean conglomerate’s half-century history. It’s unclear how many in total will respond to the union’s call, but the concern is that the action may snowball to hurt the country’s best-known corporation or trigger similar responses across a recovering tech and chip industry.
“Management has no intention of dialogue,” the union said in a statement on its website. “We have identified line production disruptions, and the company will regret this decision,” it said. The union will first target a smaller eight-inch production facility that relies more on human workers before it targets high-bandwidth memory production in Pyeongtaek. “Management will eventually relent and come to the negotiating table.”
Shares in Samsung pared earlier gains to dip 0.3% in Seoul on Wednesday, while suppliers including Wonik IPS Co, TES Co and Soulbrain Holdings Co lost ground.
Much of Samsung’s production is automated, but the company can ill afford any manufacturing snarls in the coming weeks. The company is trying to convince Nvidia Corp to use its high-bandwidth memory, a prerequisite for it to catch up to smaller rival SK Hynix Inc. in the booming artificial intelligence (AI) arena.
“Samsung will ensure no disruptions occur in production lines,” the company said in a statement. “We remain committed to engaging in good faith negotiations with the union.”
The strike also comes as the global semiconductor supply chain navigates heightened US-China tech rivalry and geopolitical challenges. Samsung accounts for roughly 20% of the global DRAM market and around 40% of NAND flash, which is used in smartphones and servers.
Investors remain largely unfazed, analysts said. The market is focused on how quickly Samsung can win approval from Nvidia to supply HBM, and has “little interest in the strike,” said Lee Seung-woo, the head of Eugene Investment & Securities’ research centre. It’s also difficult to assess what the impact will be on earnings, as a potential production disruption may drive up chip prices, he said.
The workers’ demands follow Samsung’s posting a 15-fold surge in operating profit in the June quarter, reflecting a rebound in memory chip demand and an investment boom in AI infrastructure. Investors remain concerned about the company’s market position in AI chips against SK Hynix, however.
Samsung’s largest union spent weeks preparing for the walkout after negotiations over pay and vacation time collapsed last month. This week’s development is a rapid escalation from a single-day strike in early June — the first in Samsung’s 55 years of existence.
The action is intended to drive home their demands by disrupting production at one of the company’s most advanced chip facilities, union leaders have said. It also coincides with Samsung’s biggest product launch of the year in Paris, where it’s expected to unveil new foldable phones and watches with AI and novel health tracking features.
Union leaders said more than 6,500 people signed up to take part in the three-day walkout. Police later put the turnout at closer to half that number on Monday. – Bloomberg
