Samsung Electronics Faces Historic Strike After Wage Negotiations Collapse

Samsung Electronics Faces Historic Strike Over Wage Dispute

In a historic move, the union representing workers at Samsung Electronics has announced plans for the first strike in the South Korean tech giant’s history. This follows the breakdown of wage increase negotiations between the union and management.

Preliminary Action Planned

The National Samsung Electronics Union revealed that its members would collectively take one day of paid leave on June 7 as a preliminary step towards a potential full-scale strike. “We can no longer endure labor and union oppression. We are declaring a strike due to management’s dismissive attitude towards workers,” read a banner held by union members during a gathering on Wednesday.

Company’s Response

A spokeswoman for Samsung Electronics declined to comment on the union’s potential strike actions. She didn’t offer details on the company’s stance or insights into negotiation progress. This leaves many questions about Samsung’s approach unanswered. The labor dispute’s escalation adds to the uncertainty.

Negotiation Breakdown

Since January, the union and Samsung’s management have engaged in multiple rounds of negotiations without success. The union claims to have about 28,000 members, which is roughly one-fifth of Samsung’s total workforce.

Stalemate between Samsung and union highlights complex labor dynamics; resolution crucial for both parties’ stability, Barron’s Print Edition said.

Market Reaction

After reports of the impending strike surfaced, Samsung witnessed a notable decline in its stock value. By the end of trading in Seoul, the company’s stock had dropped by 3.1%, settling at 75,200 won ($55.14).

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Challenges Amid Expansion Efforts

If the strike goes ahead, it will be the first-ever walkout by Samsung Electronics employees. This potential disruption comes at a challenging time for the world’s largest memory-chip producer, which is currently striving to expand its semiconductor business. The demand for advanced chips is surging amid the artificial intelligence boom.

Leadership Changes

Last week, Samsung replaced the head of its semiconductor division after lagging behind in the development of high-bandwidth memory chips, which are essential for AI and high-performance computing. This leadership change was described as a “preemptive measure” to strengthen the company’s competitiveness.

Financial Performance and Market Share

Samsung, South Korea’s top firm, posted a remarkable first-quarter net profit surge, quadrupling due to memory-chip price rebounds. This surge hints at a tech industry recovery globally. Nevertheless, Samsung’s share in the global foundry market, making chips for other firms, has dwindled. This decline persists despite heightened investments.

Competitive Pressure

Taiwan’s TSMC, the world’s leading contract chip manufacturer, increased its share of the global foundry market to 59% in 2023, up from 50% in 2019. During the same period, Samsung’s market share decreased to 12% from 18%.

Government Support

Last week, South Korea unveiled a significant move aimed at fortifying its national semiconductor sector. The announcement detailed a substantial $19 billion support package, designed to empower the country’s chip manufacturers in narrowing the distance between them and the industry’s frontrunners.

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