The looming Samsung labour strike is risking a global shortage in the semiconductor supply chain that is already starving for silicon as AI keeps the chip demand at an all-time high.
Being the world’s primary producer of DRAM and high-bandwidth memory chips, Samsung Electronics is a vital engine that keeps modern AI infrastructure running.
However, nearly 48,000 unionised workers plan to walk off production lines on 21 May for 18 days. This represents 38% of the domestic workforce at the company, making it the largest work stoppage in the history of the semiconductor industry.
If the workers at its South Korean factories go through with the strike, it could disrupt up to 4% of global DRAM supply. This in turn could delay AI data centre deployments and drive up semiconductor prices worldwide.
What does Samsung’s union want?
Samsung’s union has asked the company to abolish a cap that limits bonuses to 50% of annual salaries and to allocate 15% of annual operating profit to a bonus pool that would be distributed to workers. It also wants Samsung to make the changes binding beyond this year.
Samsung made a very different offer.
Transcripts of negotiations between the union and Samsung showed that in March, Samsung cited estimates that some staff at a smaller rival, SK Hynix, could receive bonuses equivalent to 607% of their annual salary and proposed that its memory chip workers would gain a bonus exceeding levels that SK Hynix workers receive.
Samsung also proposed bonuses of 50% to 100% for staff in its logic chip businesses.
These bonuses, however, would be a one-off payment for this year. In principle, it does not want to abolish the cap on bonuses at 50% of annual salaries.
Why are workers fighting for more pay now?
Samsung and SK Hynix have seen profits balloon to record highs thanks to a global shortage of memory chips amid the boom in artificial intelligence. The two companies account for the majority of global memory production.
Last year, SK Hynix abolished its cap on bonus pay for 10 years, media reports said. This resulted in bonuses more than three times higher than those offered to Samsung workers, prompting many to jump ship for SK Hynix and sparking a surge in union membership, according to Samsung’s union.
How might the strike play out?
The strike promises to be far larger and more damaging than the last walkout to affect Samsung in 2024, when about 6,000 workers took part.
Samsung’s union says that nearly 48,000 employees, the majority of them chip workers, have signed up to participate. That represents 38% of Samsung Electronics’ domestic work force.
A court on Monday partially granted Samsung’s request for an injunction, ruling that essential staffing levels at some production facilities must be maintained during any industrial action. Samsung has notified the union that this will require 7,087 workers to report for work even if the strike goes ahead.
The company’s chip factories in South Korea operate 24 hours a day across three shifts in locations such as Pyeongtaek and Hwaseong.
