“Our aim for this walkout is to disrupt production,” said union leader Son Woo-mok. (Photo: Bloomberg)
By Jenny Lee, Yoolim Lee and Sohee Kim
More than 6,500 workers of Samsung Electronics Co. walked off the job Monday to stage a rally demanding better wages, starting the largest organized labor action in the South Korean conglomerate’s half-century history.
Disgruntled workers and union supporters rallied in the pouring rain outside one of Samsung’s largest chip manufacturing complexes south of Seoul. Dressed in red armbands proclaiming a “total strike” and black raincoats, they chanted slogans and sang songs with raised fists. Union leaders, who gave the initial number of participants, hope the highly publicized protest will prompt a three-day walkout that will send a message to Korea’s largest company.
Samsung’s largest union has spent weeks preparing for a walkout after negotiations over pay and vacation time broke down last month. The anticipated action marks an escalation from a one-day strike in early June – the first in Samsung’s 55 years of existence. It aims to send a message by halting production at one of the company’s most advanced chip facilities, union leaders say.
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The union had aimed to gather up to 5,000 people for the rally outside the Samsung facility in Hwaseong, about 38 kilometers (24 miles) south of Seoul, Lee Hyun-kuk, the union’s deputy general secretary, told Bloomberg News on Friday. It is unclear how many workers will be out of a job in the coming days, and markets have so far remained calm. The company’s shares were largely unchanged on Monday morning.
The risk, however, is that the unprecedented action at Samsung could tarnish the name of the country’s best-known and richest corporation — and prompt similar responses across the tech industry. Many of those who walked out Monday were chip assembly line workers, according to the union.
“Our aim for this walkout is to disrupt production,” said union leader Son Woo-mok.
For Samsung, it may be ill-equipped to deal with turmoil within its ranks — or manufacturing rumblings — at a critical time. Now it’s pulling out all the stops to convince Nvidia Corp. to use its high-end AI memory chips – a prerequisite for staking a larger claim in a burgeoning AI market. In May, he abruptly replaced the head of its semiconductor division, which since 2023 has seen SK Hynix Inc. to dominate the core arena of high bandwidth memory or HBM.
This week, Samsung is preparing to unveil new foldable phones and watches as well as a smart ring in Paris ahead of the Olympics in a bid to fend off a challenge from Apple Inc. in its direction in the global market. In Samsung’s favor, however, is a projected rebound in global memory and electronics demand from historic lows in the post-Covid era: the company on Friday posted a 15-fold rise in earnings, but from a very low base in 2023.
Samsung representatives declined to comment as of Friday.
“The timing of this strike is particularly critical as it coincides with the ongoing challenges of the semiconductor supply chain,” said Billy Leung, an investment strategist at Global X Management Co., a member of Mirae Asset Financial Group. Samsung accounts for about 20% of the global DRAM market and about 40% of NAND flash, which is used in smartphones and servers. “Any disruption to Samsung’s operations could have a ripple effect.”
Samsung Electronics has long avoided the kind of ground-breaking turmoil that has plagued many of Korea’s major companies since Hyundai Motor Co. at Ssangyong Motor Co. Labor actions in the past have occasionally turned violent. Analysts have credited Samsung’s tight control of labor activism as a reason for its success, helping the company dominate the electronics sector from its Suwon headquarters for more than a decade. Lee Kun Hee, the late chairman of Samsung and father of current leader Jay Y. Lee, went to great lengths to prevent unions from forming.
Now, the Samsung Electronics National Union — the largest of several unions at the tech giant with more than 30,000 workers — says it is escalating matters over a breakdown in wage talks after initially seeking a less dramatic solution.
Union leaders spent weeks encouraging members to join the impending walkout. Samsung on Thursday tried to undercut that effort by announcing first-half performance-related bonuses for semiconductor staff, but the maximum 75% of monthly wages they promised did not amount to a full month’s pay, as has been typical in the past .
“Because executives are under contract, they mostly care about performance and short-term goals,” said Park Seol, a 35-year-old woman who works at Samsung’s Pyeongtaek complex. “We stand for what’s best for the company.”
At the heart of the dispute now are higher wages and additional paid holidays. Union leaders last week changed their demands to include their entire group after initially saying they wanted a bigger pay rise for about 855 workers who did not agree to a 3% annual base pay increase.
Other issues include bonuses tied to Samsung’s excess profit, which chip workers did not receive last year when their unit lost about 15 trillion won. They fear they could be out again this year even if the division turns a profit, according to union leaders.
Samsung calculates those bonuses through a complex formula that subtracts the cost of capital from tax-adjusted operating profit on a cash basis. The union said it is asking the company to simply use operating profit like some of its peers — or be more transparent in how it determines those numbers.
Historically, bonuses make up a significant portion of workers’ pay, so a loss could mean a significant reduction in compensation.
Published first: July 8, 2024 | 07:49 STI