South Korean tech giant Samsung Group has seen the largest strike in the half-century of the company’s existence. Thousands of workers at Samsung Electronics walked out of assembly lines in the rain on Monday local time for its three-day mass strike. The unprecedented mass strike could damage Samsung’s reputation and spark similar activity across the tech industry, as well as affecting the normal functioning of the entire chip supply chain.
“No pay rise or no work.”
The National Samsung Electronics Union (NSEU), one of Samsung’s largest labor unions, has been preparing for a strike campaign for the past few weeks after talks over a wage hike broke down last month. The union said 6,540 union members are participating in the strike, including 5,211 in semiconductor equipment, manufacturing, and R&D (process) positions alone, and production work is bound to be affected.
The National Samsung Electronics Union has more than 28,000 workers, accounting for about 20% or so of Samsung Electronics’ total workforce. Their demands to Samsung include the hope that Samsung will increase salary increases and adjust the performance bonus system. Leaders of the Samsung National Electronics Union said the strike action was intended to send a message that “no pay rise or no work” by disrupting production at the company’s chip factories.
According to reports, there were two main points of contention between the two sides. The first is that the salary increase is too low: the labor union believes that the 5.1% increase proposed by the company is too low, and demands that the salary increase be raised to 6.5%. The second is the performance bonus system: the labor union demanded Samsung Electronics to adjust the measurement standard of performance bonus from calculating according to the economic value added (after-tax net operating profit minus capital investment) to calculating according to the operating profit, which is the same as SK Hynix, LG Electronics and other companies.
In response, an NSEU spokesperson said that the company has been saying that they are facing a crisis for the past 10 years, but the company should not use this as an excuse not to fulfill the workers’ demands.
Samsung has had few labor disputes over the years, and Samsung founder Lee Byung-chul, who died in 1987, once said that unions would never be allowed to exist “unless my eyes are covered with dirt.” An employee once exposed an internal Samsung document that stated, “To be protected from charges of labor issues, the main organizer should be fired before the union is formed.”
It wasn’t until 2019, when Moon Jae-in, a human rights lawyer who had represented labor unions, became president of South Korea, followed by the trial of Lee Jae-yong, Samsung’s then-vice chairman and grandson of the founder, that some Samsung employees found the opportunity to form a guild. And after the formation of five labor unions at Samsung Electronics, employees have managed to get salary increases basically every year.
Earlier this year, Samsung Electronics saw its first strike in 55 years, and this strike was an escalation of the strike activity in early June. A union representative said, “The purpose of the strike is to interrupt production.”
Downhill Samsung
In South Korea, Samsung Electronics is a worker who wants to enter the “super factory”, because its wages have long been in the industry’s highest gear. According to the career information website INDEED, located in South Korea, Samsung all employees and executives of the average annual salary of 144 million won (about 751,000 yuan), even the lowest level of the factory machine operators, there are 4,800 U.S. dollars a month (about 34,800 yuan) income.

However, in recent years, labor conflicts have been widening day by day. For Samsung, this is a critical time for the development of its chip business, which cannot afford any internal turmoil or production disruption.On May 21, Samsung replaced the head of its semiconductor division, Digital Solutions (DS). According to South Korea’s Han Nation Daily, this personnel adjustment means that Samsung Electronics executives may believe that its semiconductor business is in trouble.
According to the 2023 global semiconductor vendor revenue ranking list released by market researcher Gartner, Samsung’s 2023 semiconductor revenue plummeted 37.5% to $39.9 billion, overtaken by Intel and relegated to second place, dragged down by its memory chip business.
And specifically in terms of products, in the field of high bandwidth memory (HBM), which is just needed for training artificial intelligence (AI), Samsung is already lagging behind. Samsung’s competitors, fellow South Korean semiconductor giant SK Hynix, has begun to provide NVIDIA with fifth-generation HBM products in March this year, while Samsung Electronics produces products due to heat and power consumption problems, so far failed to pass NVIDIA’s standardized tests.
In addition to the hottest HBM product line, Samsung in other semiconductor business is also going downhill. According to market research firm Counterpoint Research, Samsung’s market share in the semiconductor foundry business slipped to 13% by revenue in the first quarter of this year, down from 15.5% in the fourth quarter of last year.
In terms of revenue, although Samsung’s first-quarter earnings this year turned a profit with revenue of 6.606 trillion won, but net profit was only 1.91 trillion won. SK Hynix, on the other hand, reported revenue of 12.43 trillion won, almost double that of Samsung, and a net profit of 2.89 trillion won.
Create a chain reaction
Even so, Samsung Electronics a little bit of wind is likely to set off a storm in the memory chip market. Billy Leung, investment strategist at Mirae Asset Financial Group, said, “The timing of this strike is particularly critical because it coincides with the challenges facing the global semiconductor supply chain.” Billy Leung believes that “any disruption to Samsung’s business could have a knock-on effect.”
Samsung Electronics’ South Korean factory had suffered a power outage in March 2018. At that time, a power outage of just 28 minutes resulted in a 3.5% reduction in global flash memory production, which cost Samsung Electronics more than $36 million.In 2019, another Samsung Electronics plant suffered a one-minute power outage, and resuming production took three days.In 2021, Samsung Electronics’ Austin, Texas, plant was shut down for a month due to a grid failure, which resulted in a loss of nearly $290 million. The difficulty in restarting production also exacerbated chip shortages at the time.
However, market researcher Trendforce said that the strike at Samsung Electronics will not affect DRAM and NAND Flash production and will not result in a shortage of shipments. The organization said that DRAM and NAND Flash spot prices had already begun to fall before the strike was announced, and the downward trend has remained unchanged since the strike was announced.
Bu Rixin, executive director of Chuangdao Investment Consulting, said that judging from the current market reaction, the market price of DRAM and NAND Flash has not seen much fluctuation since the union announced the strike, and it seems that the market has not reacted to this event yet. However, with reference to the previous production stoppage, the strike is estimated to be very likely to bring huge losses to Samsung Electronics.
For the global storage chip market, step Rixin believes that the final price increase or not depends on the length of the strike. In the short term, Samsung Electronics and major storage chip makers can still respond to market demand through the existing inventory, the price of the response will not be so rapid. But if the union and management negotiations can not be advanced, the strike time is longer, DRAM and NAND Flash chips will certainly usher in price increases.