Since its establishment 51 years ago, South Korea’s leading semiconductor company, Samsung Electronics, has faced its first-ever strike by the union formed after 55 years of its founding. After not receiving a response, the union announced an indefinite strike.
The largest internal union at Samsung Electronics, the National Samsung Electronics Union (referred to as “Union All” below), began a three-day strike on July 8 with plans for a second five-day strike starting on the 15th, but then changed the plan and announced the start of an indefinite strike on the 10th.
Union All explained that during the first strike, the management did not attempt any dialogue, so they immediately entered an indefinite strike.
During the first strike, a total of 6,540 people participated, with 5,211 people participating in the semiconductor equipment, manufacturing, and research and development positions.
The union threatened that the purpose of the strike is to “delay production,” stating that regardless of whether the semiconductor factory is automated, production will inevitably face issues without relevant personnel for equipment and inspections.
The main demands put forward by Union All include: raising wages for union members, adjusting performance bonus measurement standards, compensating for economic losses caused by the strike, etc.
Samsung Electronics stated that so far there has been no delay in production, and the production line is operating normally. Solutions are being explored to fill the vacancies caused by the strike.
Despite recovering from the slump since last year, Samsung Electronics is currently facing multiple crises amid the fierce global chip battle.
Last year, Samsung Electronics’ semiconductor business recorded its largest-ever deficit of nearly 150 trillion Korean won (approximately $109 billion), placing the globally dominant Samsung Electronics in memory semiconductors at a disadvantage in the competition for high-bandwidth memory (HBM) and failing to narrow the gap with TSMC in semiconductor outsourcing.
Samsung Electronics, facing multiple crises, as a leading chip company in South Korea, strikes are bound to raise concerns that South Korea’s chip competitiveness could be compromised.
Since its establishment in 1969, Samsung Group has consistently operated without unions until 2020, believing that even without unions, the company and workers can engage in effective negotiations directly.
Changes began to emerge in Samsung Group’s union-free operations methodology starting from the end of 2019.
At that time, Samsung Group subsidiaries Samsung Electronics and Samsung C&T were sued for their alleged involvement in “manipulation leading to the dissolution of the Samsung Electronics Service Union,” resulting in 26 Samsung executives being convicted by the South Korean judiciary and offering apologies.
Then in May 2020, Lee Jae-yong, the then Vice Chairman of Samsung Electronics, announced the abolition of union-free operations.
Around 2020, union activities at Samsung Electronics became more active.
Regarding Union All’s strike, public opinion in South Korea generally believes that the strike lacks sufficient reasons.
Last year, the average annual salary for Samsung Electronics employees was 120 million Korean won (about $87,000), equivalent to the top 4% of salary earners, enjoying top-tier treatment among wage earners.
Earlier this year, an agreement was reached between Samsung Electronics management and staff representatives to increase annual salaries by 5.1%, while Union All demanded a 5.6% increase.
Of the five unions at Samsung Electronics, the largest scale Union All had a membership of around nine thousand until last year, accounting for only 7% of all employees.
However, last year, due to the semiconductor industry slump, the Equipment Solutions (DS) division of Samsung Electronics, responsible for the semiconductor business, incurred losses of 1.48 trillion Korean won (about $108 billion), and the performance bonus payment rate dropped to 0. Previously, the DS division received a performance bonus payment rate equivalent to 50% of annual salary.
At the end of last year and the beginning of this year, dissatisfaction with performance bonuses soared, particularly in the semiconductor business unit, resulting in a sharp increase in union members. Currently, Union All has more than 31,000 members, accounting for 24.8% of all Samsung Electronics employees (around 125,000). Of these, 90% belong to the semiconductor business unit.
Changes have occurred this year, with the chip industry beginning to recover. Samsung Electronics’ semiconductor business unit returned to profit in the first quarter of this year after a loss since the fourth quarter of 2022.
Prior to this strike, Samsung Electronics reported a 1452% year-on-year increase in operating profit in the second quarter in early July, breaking free from last year’s slump and showing strong recovery. In response, Samsung Electronics paid out performance bonuses for the first half of the year to the semiconductor business unit, ranging from 37.5% to 75% of monthly basic salary. To receive more performance bonuses, Union All requested an adjustment in the measurement standards for performance bonuses.