Collapse
A planned strike by 48,000 workers at Samsung Electronics is set to proceed on Thursday after negotiations over bonus payments collapsed, raising concerns about the impact on South Korea’s economy and the global semiconductor supply chain.
The strike, organised by Samsung’s labour union, follows failed mediation talks over employee compensation and profit-sharing demands. The workers involved, most of whom are employed in Samsung’s semiconductor divisions, account for about 38% of the company’s domestic workforce.
Union leader Choi Seung-ho, while addressing reporters, apologised to the public after the talks ended without a breakthrough.
“I would like to apologise to the public for not being able to produce a good result despite making as many concessions as possible,” Choi said while bowing and holding back tears.
“We will not cease our efforts to reach a deal even during the strike,” he added.
Samsung, however, blamed the deadlock on what it described as excessive demands by the union, particularly over bonus payments for loss-making divisions.
“The reason an agreement could not be reached is that accepting the labour union’s excessive demands would undermine the fundamental principles of company management,” the company said in a statement.
The dispute has heightened fears of disruption in the global semiconductor market, especially as Samsung is the world’s largest memory chip manufacturer and accounts for nearly a quarter of South Korea’s exports. Analysts warn that any prolonged production disruption could worsen semiconductor shortages already intensified by rising demand linked to artificial intelligence technologies.
Samsung shares fell 1.6% on Wednesday afternoon and have declined 4.5% over the past week, amid investor concerns that the labour dispute could permanently increase labour costs.
Attention has also shifted to whether the South Korean government will intervene through emergency arbitration, a rarely used mechanism that would suspend the strike for 30 days while negotiations continue.
Although officials had earlier warned such action was possible because of the potential economic damage, a government official said on Wednesday that discussions on emergency arbitration were “premature” and that dialogue could still continue.
South Korea’s labour commissioner, Park Soo-keun, who mediated the negotiations, said authorities remained willing to resume talks at any time.
“The government is open to restarting the mediation process anytime,” Park said, while the Presidential Blue House also urged both parties to resolve the dispute quickly.
According to an unnamed official at South Korea’s central bank, the strike could reduce the country’s projected economic growth this year by as much as 0.5 percentage points from the current 2.0% forecast if disruptions worsen.
The union has demanded that Samsung remove a cap on bonuses currently fixed at 50% of annual salaries, allocate 15% of annual operating profit to employee bonuses, and formalise the arrangement beyond a one-year period.
The dispute has also been fuelled by growing frustration among Samsung employees over widening pay disparities with rival chipmaker SK Hynix, which has benefited from strong demand for high-bandwidth memory chips supplied to Nvidia for AI systems.
According to the union, SK Hynix workers received bonuses more than three times higher than Samsung employees last year, prompting some workers to leave Samsung and contributing to increased union membership.
Gary Tan, a portfolio manager at Allspring Global Investments, said the broader supply-chain impact would likely remain manageable unless the strike drags on.
“The bigger effect is on market sentiment and longer-term memory industry pricing structure, reinforcing cost pressures,” Tan said.
Meanwhile, a South Korean court partially granted Samsung’s request for an injunction earlier this week, ruling that minimum staffing levels must be maintained at certain production facilities to avoid damage to manufacturing materials and infrastructure during industrial action.
Samsung said the ruling means that 7,087 employees will still be required to report for duty during the strike.
Boluwatife Enome
Follow us on:
