Samsung strike suddenly becomes serious

The relationship between Samsung and its largest union is deteriorating rapidly, and suddenly a strike that the union originally called more for show than effect has become very serious. This means that if the union continues its tactics, the impact on production will likely quickly reach a point that the company and all of its customers will feel.

More information on the escalating strike at Samsung

I first told you a few weeks ago about the looming dispute between Samsung and its union. Industrial action is actually quite rare in Asia. For a variety of societal reasons, unions and management in Asian culture are generally more respectful of one another than they are here in the U.S., and problems are usually resolved without a work stoppage.

This year, however, the union says, Samsung management is not playing along as usual. In mid-June, the National Samsung Electronics Union (NSEU) organized a one-day strike to get the attention of management. The union succeeded in getting thousands of members to stop work and hold a solidarity rally.

It sounds a bit crazy…

For those of you who have been involved in a union before, the following part will sound a little crazy… but it didn’t surprise me in the least. The union organized the strike for the day after a holiday, when factories are just starting to ramp up production again and are not yet running at full capacity. They did this to intentionally mitigate the impact on production and not cause too much pain to the company. It was meant to be a symbolic show of unity.

As I said, labor relations in Asia are a very different matter.

However, union leaders were angered when, during and after this one-day event, management went to great lengths to explain to all media that this action was nothing – it had NO impact. Company executives told the media that there was NO impact on production, sales or profits. The executives probably even yawned while saying this!

During the negotiations, Samsung reported a 15-fold increase in operating profit

At the beginning of July, the company reported a 15-fold increase in operating profit thanks to the dramatic increase in demand and prices for chips as the world scrambles to strengthen the infrastructure for AI. But apparently they are still locking the union in at the bargaining table. Then the union announced that it would call for another work stoppage, this time for 3 days – and to involve more of their 30,000 members. That may not sound like a major escalation to you… but in Asia it was huge. This time the goal was to damage production and show the company that the union meant business.

Once again, Samsung management should have recognized the union’s signal, which was announced long before the strike. But according to union leaders, all they hear is crickets. Management seems to have seen through the union’s bluff.

From a minor brawl … to an open war

So the matter quickly developed from a demonstration of unity to a manageable scuffle to a total warThe union has announced that the strike will last indefinitely until negotiators receive a reasonable offer from management. And this time, the union is coordinating work at several Samsung production plants. The first one-day strike took place mostly at just one production plant.

This is the first major strike in Samsung’s history. We are entering uncharted territory. If the union is as determined as it claims, the strike could indeed last for a long time and have a major impact on production.

According to NSEU, Samsung’s chip production is already affected

In fact, the NSEU claims that there have been “problems” on the 8-inch wafer production lines since the first day of the strike. That is at least what it told the Reuters news agency.

Although the NSEU is a relatively young union, it has quickly grown to over 30,000 members and has been able to mobilize thousands of its members to take part in these actions. One rally even took place in the rain outside a Samsung factory. While there is no official count of the union members who took part, estimates range from several thousand to several thousand.

The goals of both sides seem to be far apart

The union is demanding higher wages and an additional holiday day per year. It also wants to negotiate a new formula for calculating bonus payments. Currently, the system is opaque to employees, complicated and based on factors beyond their control. The NSEU wants to introduce a bonus system modeled on Samsung’s for executives, based on personal performance goals.

So far, the two sides seem to be quite far apart.

Learn more about Samsung Electronics at samsung.com (US website).

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