48,000 Samsung employees are on strike after receiving a 50% bonus. What are their demands?
The bonus dispute at Samsung Electronics appears to be escalating into a major crisis. 48,000 employees are preparing to strike, which could impact chip supplies. Investors fear this could increase the company's costs and lead to market pressure.
Samsung Electronics, the world's largest memory chip manufacturer, is facing a major labor crisis. 48,000 employees are preparing to go on strike starting Thursday after negotiations between management and the union over bonus payments failed.
This strike could pose a major concern not only to Samsung but also to South Korea's economy and the global semiconductor supply chain. Demand for chips is already high amid the AI boom, and the threat of production disruptions is increasing market concerns.
Bonus dispute escalates conflict
According to a Reuters report, Samsung's union and the company had been negotiating bonus payments for several days, but no resolution was reached. The union demanded that bonus limits be abolished and that 15 percent of the company's annual operating profit be distributed to employees.
Union leader Choi Seung-ho stated that they had accepted the government's final mediation proposal, but the company remained unconvinced on the final issue.
Samsung, on the other hand, maintains that the union's demands are excessive and that accepting them would impact the company's operating principles. Samsung's shares have also fallen following this dispute.
Chip supply and economy at risk
Samsung accounts for nearly a quarter of South Korea's total exports and is the world's largest DRAM memory chip manufacturer. A prolonged strike could impact the entire global chip supply chain.
The AI industry already has a high demand for high-bandwidth memory chips, and any disruption to production could further drive up prices. A South Korean central bank official has warned that,
in a worst-case scenario, the strike could reduce the country's economic growth rate by 0.5 percent. The government has indicated that emergency arbitration may be invoked if necessary to stop the strike.
Comparisons with SK Hynix have sparked outrage.
A major reason for Samsung employees' dissatisfaction is the growing wage gap with rival company SK Hynix. The union claims that last year, SK Hynix employees received three times more bonuses than Samsung employees.
This is why many employees are leaving Samsung and moving to SK Hynix. Significantly, SK Hynix has established a significant lead in the supply of high-bandwidth memory needed for AI chips and is supplying companies like Nvidia.
Market experts believe that if the strike does not last long, the impact on supply will be limited, but it will certainly increase investor sentiment and put pressure on memory industry prices.