For the first time, workers at Samsung, the conglomerate that dominates South Korea's economy, went on strike this past Friday. This unprecedented action comes as Samsung Electronics fights to regain its edge in the competitive memory chip market, a crucial component for advanced artificial intelligence systems.
Workers in Samsung’s chip division were expected to make up the majority of those participating in the planned one-day strike. Union representatives revealed that multiple rounds of negotiations over wage increases and bonuses had failed.
“The company doesn’t value the union as a negotiating partner,” said Lee Hyun Kuk, vice president of the Nationwide Samsung Electronics Union, the largest of Samsung's five labor groups. Representing 28,000 members, about one-fifth of Samsung’s global workforce, the union saw nearly 75 percent voting in favor of the strike in April.
Union workers reportedly received no bonuses last year, a stark contrast to previous years where some bonuses amounted to 30 percent of salaries. "It feels like we’ve taken a 30 percent pay cut," Mr. Lee said. The average union worker earned about 80 million won (approximately $60,000) last year before incentives.
A Samsung Electronics representative stated that the company was attempting to reach an agreement with the union but declined to comment further on the negotiations' specifics. The work stoppage did not impact Samsung’s production or business activities, according to the company representative.
The strike was strategically timed to fall between a national holiday and the weekend, a period when many in South Korea planned to take vacation. The exact number of participants remains unclear, but a small group of workers gathered in front of Samsung’s Seoul headquarters on Friday morning, with organizers playing protest songs over loudspeakers.
Despite the strike, Samsung faces larger challenges, notably in the memory semiconductor sector where it has been a leader for decades. Recently, Samsung lost its technology leadership to competitors, including local rival SK Hynix, which now leads the market for next-generation, high-bandwidth memory chips crucial for AI systems.
Samsung has been the world's largest maker of memory chips for years, reporting about $1.4 billion in profit from its chip division in the first quarter of this year, following four straight quarters of losses. Despite these losses, Samsung remained the top memory chip maker by revenue and market share last year, according to TrendForce. However, SK Hynix's anticipation of AI-driven demand allowed it to outpace Samsung in high-bandwidth memory chip production.
Jun Young-hyun, who recently took over Samsung's chip division leadership after an executive shake-up, aims to navigate these challenges. Samsung plans to triple its high-bandwidth memory output over last year and double that again by 2025. Additionally, the company intends to invest approximately $200 billion by 2042 in a new semiconductor industrial complex in South Korea and $40 billion in Texas facilities.
Labor strikes in South Korea are not uncommon, with over 10,000 young doctors recently striking against government policies and construction workers rallying over labor discontent. For decades, Samsung was known for its aversion to organized labor, with unions organizing workers only in recent years.
Lee Hyun Kuk emphasized that the goal of Friday’s strike was not to disrupt production but to signal to management that the union had matured and could no longer be disregarded. Following the strike vote in April, the union held multiple rallies, appealing to public support with events resembling street festivals and featuring K-pop singers.
The union has parked a protest bus near Samsung's Seoul offices, bearing the slogan: “Labor oppression, union oppression, we won’t take it anymore!” While the union members planned to return to work after the one-day strike, they are prepared for additional strikes if necessary.
This historic strike at Samsung Electronics marks a significant moment in the company's labor relations and highlights broader challenges in the semiconductor industry as it navigates market pressures and the evolving landscape of artificial intelligence technology.
