Samsung: Strike threatens semiconductor plants

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In South Korea, a debate has ignited about the extent to which employees should benefit from the enormously increasing profits of memory manufacturers due to the AI boom. Disputes in collective bargaining at Samsung are now even attracting government representatives who want to mediate between unions and the company. At the same time, discussions about social justice are arising.

In the collective bargaining dispute at Samsung, unions are demanding a fixed participation of 15 percent in the operating profits of the company divisions. At the same time, the limitation to 50 percent of the normal annual salary should be dropped for payouts. At the end of April, around 39,000 employees already stopped working for a lunch break to demonstrate for long-term bonuses.

Group-wide, Samsung generated revenue of around 134 trillion won (KRW) in the first quarter, nearly 78 billion euros at the current exchange rate. Of this, operating profit before taxes was a good 33 billion euros. 15 percent would correspond to almost five billion euros in bonus payments in just one quarter. For the entire year, analysts expect an operating profit of 174 billion euros.

Hundreds of thousands of euros for employees in semiconductor plants

The bonuses are to be paid out per subsidiary. By far the largest beneficiaries would be engineers and other employees of the semiconductor division Samsung Device Solutions, which accounted for 94 percent of the total operating profit. Revenue from RAM and NAND flash chips has quadrupled within a year: as cloud hyperscalers sweep the memory market, prices are rising rapidly, which enormously increases profits.

Competitor SK Hynix is fueling the demand with its own agreement: The memory manufacturer will pay out ten percent of its own operating profit to employees for the next ten years. The company currently employs around 35,000 people. Bonus limits are dropped. Already in 2027, average annual bonuses per employee could exceed 500,000 euros.

18-day strike possible

According to Financial Times sources, Samsung is agreeing to an initially one-time bonus of 13 percent of operating profits. The sticking point is its inclusion in the collective agreement: Samsung is apparently postponing a long-term regulation until next year.

The negotiations so far have broken down without result, which is why Samsung's largest union (“Super-Enterprise Labor Union”) is threatening an 18-day strike starting May 21. According to Seoul Economic Daily, around 26,000 employees want to participate in the strike, mainly in the semiconductor plants. In effect, memory production would be paralyzed.

Since a wafer spends several months in chip production, the consequences would be far-reaching. Professors and union members estimate the financial damage at 10 trillion to 30 trillion KRW, which would correspond to 5.8 billion to 17.4 billion euros.

Furthermore, there could be long-term consequences if customers turn away from Samsung. This could be particularly fatal for Samsung Foundry, which, as a contract chip manufacturer, produces processors for customers, for example. This part of Samsung Device Solutions is stagnating even in times of the AI boom because the manufacturing processes are inferior to those of world market leader TSMC and the yield of functional chips is reportedly lagging behind.

Government representatives such as Kim Do-hyung from the Gyeonggi Regional Employment and Labor Office, a regional authority of the Ministry of Employment and Labor, have persuaded both sides to engage in subsequent conciliation talks. Among others, the Korea Herald reports that the National Labor Relations Commission (NLRC) should accompany the talks.

Unfair distribution?

Due to the unequal distribution between the semiconductor division and all sister companies, support within Samsung's unions is reportedly dwindling. Parts of the electronics divisions would benefit little to not at all from the planned bonuses. LG, for example, is said to pay proportionally higher bonuses due to lower absolute profits.

Samsung is caught in the middle here, trying to prevent its own employees from moving to SK Hynix while satisfying the various divisions. SK Hynix, as a pure memory manufacturer, is spared such considerations. In South Korea, a national fairness debate is emerging.

(mma)