All eyes are on South Korea today as officials seek to avert a strike by more than 45,000 Samsung workers that could impact semiconductor supply chains around the world.
With a walkout scheduled to begin on May 21, Samsung Electronics and its labor unions held what the government described as the final round of negotiations today on May 18, following the collapse last week of the first round of government-led talks, according to Reuters.
The threatened 18-day strike comes amid severe global shortages of memory chips, key components in AI data centers, smartphones and laptops that have boosted profits for Samsung and its partners in recent months.
The dispute centers on Samsung’s performance-based bonus program. According to CNBC, the union wants bonuses equal to 15pc of Samsung’s operating profit, while Samsung management opposes a proposal of 10pc of operating profit.
The economic values could not be higher. CNBC quotes Prime Minister Kim Min-seok as estimating the direct strike’s losses at 1trn won ($664.7m), which could rise to 100trn won if disruptions in chip production force Samsung to abandon wafers already in production.
The company accounts for 22.8pc of South Korea’s exports and revenue equivalent to 12.5pc of GDP, according to CNBC. Kim described Monday’s talks as the last chance to avoid a strike, warning that “the economic losses we will face are unimaginable”.
Pressure on the unions grew even more today (May 18) when the Suwon District Court partially granted Samsung’s request for a ban on two unions, ordering that labor levels necessary for safety, plant protection and product quality must remain at normal levels during any industrial action.
The Financial Times quoted corporate lawyer Hyeseop Sim as saying the decision would “significantly weaken the scope of the strike and the bargaining power of the unions”, adding that chip production is unlikely to be seriously disrupted.
Samsung chip division executives have also warned that key customers including Nvidia have indicated they may temporarily suspend shipments during the strike due to product quality concerns, according to Reuters. President Lee Jae-myung called for a balance on Monday, writing in X that “employees must be respected as companies, and the management rights of companies must be respected as workers’ rights”.
“Employees must be able to receive fair compensation for the work they provide, and shareholders who have invested while facing risks and losses have a share in the profits of companies,” he continued.
Samsung chairman Lee Jae-yong issued a rare public apology to customers around the world on Saturday for causing “anxiety and worry”, according to local Korean media.
All eyes will be on the talks, which are reported to be concluded tomorrow, as the industry is afraid of another clash in global chip supply plans.
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