Samsung Electronics’ largest labor union announced an indefinite extension of their three-day strike, potentially causing disruptions to global chip manufacturing.
As a global leader in microchip manufacturing, Samsung generates $235 billion annually from its semiconductor division. In 2023, Samsung produced approximately 7.5% of the world’s semiconductors and currently dominates the global memory chip market, manufacturing 42.8% of all DRAM (dynamic random-access memory) chips.
Key Factors Driving the Samsung Strike
Since January, several rounds of talks between the union and management have failed to find a compromise. As a result, the union has put forth specific demands to address their concerns.
The National Samsung Electronics Union demands pay raises, transparent performance-based bonuses, and an extra day off yearly. The union has claimed that over 6,000 members are participating, with more than 5,000 of those members coming from the critical semiconductor division.
Historically, Samsung maintained a no-union policy and engaged in union-busting activities worldwide. However, in May 2020, Vice Chairman Lee Jae-young apologized for these practices. In August of 2021, Samsung signed its first-ever collective agreement with its labor union, including 95 clauses addressing union rights and labor-related issues.
This is the first indefinite strike in Samsung’s history, highlighting the company’s lack of preparedness to address labor issues with its workforce. Additionally, it marks a significant turning point in Samsung’s labor relations, particularly given its past no-union policy.
Potential Impacts on Microchip Manufacturing
Although Samsung has claimed that chips production has not been disrupted, the situation remains uncertain. However, concerns persist as the union intensifies its efforts. The union is primarily focusing on less-automated manufacturing lines, particularly the 8-inch wafer line with plans to extend its influence to high-bandwidth memory (HBM) chips, which are crucial for powering AI. This threat to HBM chip production could hinder Samsung’s competitive edge in advanced technological sectors against its rivals.
Eight-inch wafers are typically used for ‘legacy products’ like power semiconductors or chips for home appliances. Unlike Samsung’s more automated semiconductor lines designed for high-tech devices, the 8-inch wafer foundry lines are less automated, giving the union greater leverage in its actions against management.