Samsung Electronics Co.’s largest labor union announced Friday its firm decision to proceed with a major general strike next week, despite the tech giant’s offer to resume negotiations without preconditions. This looming Samsung strike could significantly impact the global technology supply chain.
An official proposal was extended to the union earlier today, representing Samsung management’s latest attempt to prevent the planned 18-day industrial action. Scheduled to commence next Thursday, this strike threatens to disrupt critical production at the world’s foremost memory chipmaker, a cornerstone of the global semiconductor industry.
The union has firmly reiterated its stance, indicating no readiness for further dialogue unless its core demands regarding performance-based bonuses are met. This condition must be addressed before another round of government-mediated talks, initially proposed for Saturday, can proceed.
“We are open to discussions only after June 7,” stated Choi Seung-ho, head of Samsung Electronics’ largest labor union, referencing the day after the scheduled conclusion of the planned strike. He further affirmed, “We intend to exercise the rights guaranteed to us under the Constitution,” underscoring the union’s resolve in this high-stakes labor dispute.
Prior government-led mediation talks, spanning two days, concluded Wednesday without an agreement. Labor and management remain deeply divided, specifically over performance-based bonuses tied to the substantial earnings from the company’s artificial intelligence (AI)-related semiconductor business, occurring amidst the ongoing global memory supercycle.
According to the latest official communication sent to the union, Samsung management proposed maintaining the existing excess profit incentive system. Furthermore, they suggested calculating the bonus pool based on either 10 percent of operating profit or Economic Value Added (EVA), offering a flexible approach to compensation.
In a bid for a more adaptable reward framework, the company also put forward the introduction of a special compensation system, aiming to foster a more flexible incentive structure for its employees.
Conversely, the labor union’s demands are clear: fixed performance bonuses equivalent to 15 percent of the operating profit generated specifically by the company’s highly profitable semiconductor division, coupled with the complete removal of any payout cap.
Choi previously confirmed that approximately 41,000 unionized workers have already expressed their intent to participate in the upcoming general strike, with projections suggesting this number could swell to over 50,000, highlighting the scale of potential disruption.
The South Korean government has voiced profound concerns, emphasizing that a strike at Samsung Electronics must be averted at all costs. Officials warn that such an industrial action could pose significant risks to national economic growth, given Samsung’s pivotal role.
Industry observers and economists estimate that a full-scale strike could inflict losses on the export-dependent South Korean economy reaching up to an staggering 100 trillion won (approximately $66.7 billion), underscoring the severe economic implications.
Despite the labor unrest, the tech giant reported a record 57 trillion won in operating profit for the first quarter. Market analysts further project the full-year operating profit for Samsung could reach around 300 trillion won, providing context to the ongoing dispute over profit sharing.
