Samsung workers begin three-day strike over wage increases

CHIP PROBLEMS:
The general strike, which also includes workers on Samsung’s chip assembly lines, comes against the backdrop of challenges in the semiconductor supply chain, an expert said.

• AFP, HWASEONG, South Korea

Workers at South Korean technology giant Samsung Electronics Co. began a three-day general strike yesterday over wages and benefits, the head of a union representing tens of thousands of employees said, adding that the action could affect production of memory chips.

Samsung Electronics is the world’s largest manufacturer of memory chips and contributes a significant share to the global production of high-end chips.

Wearing raincoats and armbands reading “Fight in Solidarity,” thousands of workers gathered outside the company’s foundry and semiconductor factory in Hwaseong, an hour south of Seoul.

Samsung management has been locked in negotiations with the union since January. The two sides have failed to resolve their differences over benefits, and the union rejected a company offer of a 5.1 percent pay raise.

“The strike started today,” said Son Woo-mok, chairman of the National Samsung Electronics Union.

“Today’s general strike is just the beginning,” he added.

“Remember why we are here. Please do not come to work or take any work-related calls until July 10,” he told the crowd of workers.

About 5,200 people from the factory, production and development sectors joined the protest, the union said.

The union, which has over 30,000 members, more than a fifth of the company’s total workforce, announced the three-day general strike last week, saying it was a last resort after talks failed.

The move followed a one-day strike last month, the first collective action of its kind at the company, which went decades without unionization.

In March, workers rejected an offer of a 5.1 percent pay rise, despite the union’s previous demands including improved annual leave and transparent, performance-related bonuses.

“Although the strike is only scheduled for three days, the participating members include workers on chip production lines,” said Kim Dae-jong, an economics professor at Sejong University. “As the union could hold further strikes if the deadlock continues, this could pose a major risk to Samsung management in the race for dominance in the competitive chip market.”

Samsung’s share price closed largely unchanged yesterday after a statement said the strike had no impact on chip production.

The company, the flagship subsidiary of South Korean conglomerate Samsung Group, reported a 15-fold increase in its second-quarter operating profit on Friday as demand for the advanced chips that power artificial intelligence (AI) systems surged thanks to the success of ChatGPT and other generative AI products.

This week, the company is preparing to unveil new foldable phones and watches, as well as a smart ring, ahead of the Paris Olympics, in a bid to forestall a challenge from Apple Inc. to its global market leadership.

“The timing of this strike is particularly critical as it coincides with ongoing challenges in the semiconductor supply chain,” said Billy Leung, investment strategist at Mirae Asset Financial Group.

Samsung accounts for about 20 percent of the global DRAM market and about 40 percent of the NAND flash used in smartphones and servers.

“Any disruption in Samsung’s operations could have a ripple effect,” Leung said.

Additional reporting from Bloomberg