Disruption In Production As Samsung Union Dealers Embark On An Indefinite Strike

In a bid to force management to negotiate, A union representing the workers at Samsung Electronics in South Korea will go on strike indefinitely.

The strike is the biggest labour action in the tech giant’s history and steps up pressure on the chipmaker’s management, who last week predicted a huge second-quarter operating profit increase.

“(We) declare a second indefinite general strike from July 10, after learning that the management has no willingness to talk,” the National Samsung Electronics Union said in a statement.

More than 5,000 members stopped working Monday for what was meant to be a three-day strike, part of a long-running battle over pay and benefits.

The move follows a one-day walkout in June, the first such collective action at the company, which went decades without unionisation.

The union has more than 30,000 members — more than a fifth of the company’s total workforce.

Samsung told AFP Wednesday that the strike would not affect production.

“Samsung Electronics will ensure no disruptions occur in the production lines,” a spokesperson told AFP, adding the company “remains committed to engaging in good faith negotiations with the union”.

But the union said it had confirmed “clear disruption in production”, and added that the longer the strike went on “the more the management will suffer”.

“Eventually, they will kneel and come to the negotiation table. We are confident of victory,” it added in a statement, urging more workers to participate.

‘No impact’

Samsung Electronics is the world’s largest memory chipmaker and accounts for a significant chunk of global output of the high-end chips used in generative AI.

But as semiconductor factories are highly automated with low demand for actual manpower, it is likely the strike will not have a major impact, Avril Wu, an analyst at Taipei-based research group TrendForce, told AFP.

“Even if the strike is extended, the current assessment is that there will still be no significant impact,” Wu said.

The union has been locked in negotiations with management since January, but the two sides have failed to narrow differences.

The union’s demands, newly released on Wednesday, include a 5.6 percent pay raise for all members, transparent performance-based bonuses, compensation for financial losses incurred due to the strike and a guaranteed day off on the union’s founding day.

Whether the strike hits production “depends on various factors, (such as) duration of the strike, accordingly lost days of production and recoup strategy”, said Neil Shah, research vice president at Counterpoint Research.

He added that it was also important “how Samsung management has prepared knowing this could happen and already have simulated the solutions to solve this quickly”.

Samsung Electronics managed to avoid having its employees unionise for almost 50 years — sometimes adopting ferocious tactics, according to critics — while rising to become the world’s largest smartphone and semiconductor manufacturer.

Company founder Lee Byung-chul, who died in 1987, was adamantly opposed to unions, saying he would never allow them “until I have dirt over my eyes”.

The first effective labour union at Samsung Electronics was formed in 2019.

Soon after, Lee Jae-yong, the founder’s grandson and current chairman of Samsung Electronics, declared an end to the firm’s no-union principle in 2020.

Samsung’s labour policy “failed to meet the demands of changing times”, Lee, then Samsung’s vice-chairman, said.

The firm is the flagship subsidiary of South Korean giant Samsung Group, by far the largest of the family-controlled conglomerates that dominate business in Asia’s fourth-largest economy.

Samsung recently predicted a more than 15-fold increase in its on-year second-quarter operating profits, thanks to growing demand for generative AI.