Samsung Electronics hit by unprecedented 3-day strike

More than 6,500 workers at Samsung Electronics have followed up the first ever walkout at the South Korean tech giant with a full-blown strike over pay and conditions.

Workers from the National Samsung Electronics Union, whose more than 30,000 members account for a quarter of the South Korean company’s workforce, struck on Monday.

Union members had previously taken a collective day off from their annual leave in early June in the first-ever walkout in Samsung’s 55-year history.

The union is demanding that Samsung respect labour activities, improve bonuses and increase holiday allowances.  

With only about 20 per cent of NSEU members taking part, the industrial action was weaker than strikes at other big Korean companies such as Hyundai Motor where unions are more militant. But the strike had not been made mandatory and observers said the numbers were higher than the union and public expected.

The three-day action comes as Samsung struggles to ease concerns about its weakening technological competitiveness, especially in advanced D-Ram chipmaking such as high bandwidth memory chips used for training artificial intelligence models such as ChatGPT. 

The union expects some disruption to Samsung’s chipmaking operations, with it claiming that its estimated 6,500 taking part were more workers than expected, including 5,000 in semiconductor design, manufacturing and development. Samsung said its operations were not being affected.

“We are doing this out of desperation that it can’t be done if not now,” union leader Son Woo-mok said at a rally in pouring rain outside Samsung’s headquarters in Hwaseong, 45km south of Seoul. “We will continue to struggle until the company changes.”

The union has threatened to hold a five-day strike next week if the company does not accept its demands.

The walkout comes after Samsung last week reported its fastest pace of sales and profit growth in years in the second quarter on the back of the industry’s strong recovery from last year’s historic slump. The company posted a more than 15-fold increase to Won10.4tn ($7.5bn) in April to June operating profit on strong demand for artificial intelligence products.

Despite the stronger-than-expected quarterly earnings, the world’s largest memory chipmaker is grappling with a series of challenges. 

Samsung shares have gained about 10 per cent so far this year, but this lags far behind a 60 per cent rally in the shares of domestic memory-chip rival SK Hynix, as investors remain worried about its performance in the booming AI segment.

The labour unrest is a new challenge for a company with an anti-labour reputation. Its union membership has sharply increased since chair Lee Jae-yong declared an end to the company’s no-unions policy in 2020.  

The NSEU has accused Samsung’s management of failing to capitalise on booming AI demand. It has yet to pass Nvidia’s qualification tests for high bandwidth memory chips, while SK Hynix has benefited from being the exclusive supplier of the most advanced chips to the US company.

Many analysts expect Samsung to start supplying the high bandwidth chips to Nvidia in the second half of this year. “It will probably happen in the near future,” said Chan Lee, managing partner at Petra Capital Management, a Seoul-based hedge fund. “Now that the direction is clear, the company will fast catch up in the field.”