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Samsung Electronics Union Declares General Strike Amid Pay Dispute

TL;DR intro

  • Samsung Electronics union begins general strike.Demands for better compensation and work-life balance are at the forefront.
  • 28,000 NSEU members participate.A significant workforce segment is involved in the strike action.
  • Strike risks impacting production.Amid semiconductor market challenges, the strike could worsen production issues.

The National Samsung Electronics Union (NSEU) announced on Monday that it would begin a general strike, demanding improved pay and additional time off. This escalation follows a one-day walkout last month and represents a significant challenge to one of South Korea's largest corporations.

The NSEU, which includes around 28,000 members or over 20% of Samsung Electronics' workforce, is pushing for enhancements to the performance-based bonus system and an extra day of annual leave. In a live YouTube broadcast, NSEU president Son Woo-mok declared, "We are commencing a general strike today. We will persist with this 'no pay no work' strike until our demands are satisfied."

Samsung Electronics has yet to issue a comment on the strike.

Potential Impact on Samsung's Operations

The union's previous industrial action in the form of a one-day walkout reportedly did not affect production or business activities. However, the new general strike poses a greater risk of disruption.

As the world's leading memory chip producer and a major global smartphone manufacturer, Samsung Electronics is currently facing challenges, particularly in advanced chip technology. Recently, the company replaced the head of its semiconductor unit to address what it termed a "crisis" in the industry.

A prolonged or widespread strike would significantly challenge Samsung as it works to keep pace with competitors in producing high bandwidth memory (HBM) chips essential for AI applications.

Growth of Unionization and Labor Relations

Union membership at Samsung has grown rapidly since the company pledged in 2020 to cease its practices against organized labor. The union's first strike highlighted the increasing labor movement within Samsung. Workers in the company's chip division are expected to play a significant role in the strike, which follows several rounds of unsuccessful negotiations over wages and bonuses.

Lee Hyun Kuk, vice president of the Nationwide Samsung Electronics Union, criticized the company's approach to negotiations, stating, β€œThe company doesn't value the union as a negotiating partner.” Nearly 75% of the union's members voted in favor of the strike in April.

Union workers have expressed dissatisfaction over the lack of bonuses, with some feeling as if they had experienced a 30% pay cut compared to previous years. The average union worker earned about 80 million won last year, or approximately $60,000, before incentives.

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Broader Implications for Samsung

This strike comes at a crucial time for Samsung Electronics, which is trying to reassure clients and investors about its ability to meet the demands of the AI boom. Despite facing several quarters of losses, Samsung's chip business reported a profit of around $1.4 billion in the first quarter of this year.

Samsung remains the largest maker of memory chips by revenue and market share, yet it faces stiff competition from local rival SK Hynix. SK Hynix has taken the lead in the market for next-generation high-bandwidth memory chips, capitalizing on the growing demand from companies developing AI systems.

Samsung has announced plans to triple its output of high-bandwidth memory products over last year and to double that again by 2025. The company also intends to invest about $200 billion by 2042 in a new semiconductor industrial complex south of Seoul and $40 billion in facilities in Texas.

The general strike by the National Samsung Electronics Union marks a pivotal moment in Samsung's labor relations, underscoring the growing influence of organized labor within South Korea's largest conglomerate. As Samsung navigates internal labor disputes and external market competition, the outcomes of these negotiations will be closely watched by industry stakeholders.

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