Workers at Samsung, the conglomerate that dominates South Korea’s economy, went on strike for the first time on Friday.
The move comes as Samsung Electronics struggles to regain its edge in the business of making memory chips, a key component of advanced artificial intelligence systems, upending long-standing rivalry between global technology companies.
Workers at Samsung’s semiconductor division are expected to make up the majority of those not showing up to a one-day strike planned for Friday, after union representatives said multiple rounds of negotiations over wage increases and bonuses had collapsed.
“The company doesn’t value the union as a negotiating party,” said Lee Hyung-guk, vice president of the Samsung Electronics Workers’ Union, the largest of the company’s five national unions. The union represents 28,000 members, about a fifth of Samsung’s workforce, and nearly 75% voted in favor of the April strike, he said.
Lee said union members did not receive any bonuses last year, although in the past some received bonuses of as much as 30 percent of their salary. “It’s like we’ve taken a 30 percent pay cut,” he said. Union members’ average annual salary last year was about 80 million won, or roughly $60,000, excluding incentives, he said.
A Samsung Electronics representative said the company was seeking to reach an agreement with the union but declined to comment on details of the negotiations.
A Samsung representative said the strike had not affected the company’s production or business activities. The strike fell between a national holiday and a weekend – a day when many people in South Korea would be taking time off. It was unclear how many workers took part in the strike. A small number of workers gathered in front of Samsung headquarters on Friday morning, where organizers played protest songs over loudspeakers.
Still, the timing is inconvenient for a company that has been trying to reassure customers and investors that its semiconductor business can meet the demands of the artificial intelligence boom.
“Samsung is a highly respected company in memory semiconductors and has been a leader for decades, but it has lost its technology leadership to competitors,” said Nam Hyun Kim, an analyst at equity research firm Arete Research. “The union strike is nothing compared to the many problems Samsung faces at this point,” Kim said.
While so-called logic chips run computers, memory chips let computers store information. Memory chips are found in everything from smartphones to refrigerators. Advanced computers use large amounts of both types of chips, and generative artificial intelligence systems rely on super-powerful, high-bandwidth memory chips to create text, images, and other types of content on demand.
Samsung has long been the world’s largest memory chip maker and reported profits of about $1.4 billion from its chip division in the first quarter of this year.
But that followed four straight quarters of losses, with Samsung finishing last year with its lowest profit in more than a decade.
Despite the losses, Samsung remained the world’s largest memory chip maker by sales and market share last year, according to market research firm TrendForce. But early in the new year, local rival SK Hynix took the top spot in the market for next-generation, high-bandwidth memory chips amid a surge in demand that sent Nvidia and other companies developing artificial intelligence systems scrambling to buy them. Analysts say SK Hynix predicted the demand sooner than Samsung. Samsung’s foundry business, which makes chips designed by others, has also lagged behind rivals.
Chung Yong-hyun, who was appointed head of Samsung’s semiconductor division after a senior reshuffle last month, told colleagues that the result was the company’s biggest loss in its history.
Jun previously ran Samsung’s semiconductor business when it overtook Intel to become the world’s largest chipmaker by sales, and also ran the company’s battery division after the company halted production of a range of smartphones after several of them spontaneously combusted.
Samsung representatives said the company plans to triple production of high-bandwidth memory products from last year and double it again in 2025. The company said it plans to invest about $200 billion through 2042 in a new semiconductor industrial complex south of Seoul that the government is developing, and will spend $40 billion at the Texas facility.
Jun’s efforts to return come as Samsung is trying to emerge from years of uncertainty after Chief Executive Lee Jae-yong was embroiled in a corruption scandal that led to the impeachment of former President Park Geun-hye.
South Korea’s richest man, Lee, is a descendant of the family that founded Samsung, the largest of the family-run conglomerates known as chaebols that have transformed South Korea into an export powerhouse and influenced nearly every aspect of society, according to Bloomberg News.
In February, Lee was acquitted of additional charges related to the merger that helped him secure control of Samsung Electronics. Lee’s legal troubles continue to put Samsung’s influence over South Korea’s economy and politics in the spotlight.
Samsung was founded as a vegetable and dried fish shop by Lee’s grandfather, Lee Byeong-cheol, in 1938. The company expanded quickly, founding Samsung Electronics in 1969 to make televisions and refrigerators, and soon after semiconductors.
Labor strikes are not uncommon in South Korea: More than 10,000 young doctors have walked off the job since February in protest at the government’s plan to increase medical school admissions quotas, and last spring thousands of construction workers rallied in protest against the president’s labor policies.
Samsung has been notoriously anti-union for decades, and it’s only in recent years that unions have been able to organize workers at the company.
Lee, the union representative, said some employees have expressed anxiety about joining the union.
“Our goal on Friday is not to impact the production line, but rather to send a message to management that we have reached a certain level of maturity,” Lee said.
After the April vote, the union held several rallies, organizing them as street festivals to drum up public support, even inviting K-pop singers to entertain the crowds.
Since the union announced the strike day last week, buses bearing banners bearing the union’s protest slogan “Worker oppression, union oppression, we can’t take it anymore!” have been parked in front of Samsung’s offices near Seoul’s fashionable Gangnam district.
The workers have agreed to take a day off collectively and then return to work, but are prepared to take more time off in the future if they cannot come to an agreement with the company, Li said.
