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Economic Significance of Samsung
Samsung Electronics' economic footprint in South Korea
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Why are nearly 50,000 Samsung workers about to strike in South Korea ...
South Korean chipmaker Samsung Electronics is facing one of the most serious workers’ strikes in its history, with a protest which could affect the overall economy and the group’s global supply of semiconductors.The company’s workers’ union has announced that more than 48,000 workers will stop work on Thursday to protest for 18 days over their bonus payments.Recommended Stories list of 3 itemslist 1 of 3South Koreans gear up to roar on football team from rival Northlist 2 of 3South Korea says it is investigating an incident on May 4 when two unidentilist 3 of 3Starbucks Korea CEO fired over promotion that evoked military crackdownend of listThe electronics giant is a major engine in South Korea’s economy, producing revenues equal to about 12.5 percent of the country’s gross domestic product (GDP).What has led to the strike and why is it a cause for concern?Here’s what we know:What is the dispute between Samsung and its union about?Samsung Electronics’ Union has demanded that the company abolish a cap on bonuses that currently stands at 50 percent of annual salary and instead allocate 15 percent of the company’s annual operating profit to bonuses.According to local media reports, the union has highlighted other, smaller companies such as SK Hynix, a Samsung rival, which pays its workers higher bonuses.Samsung Electronics has defended its pay scheme.In a media statement, it said the union had made “unacceptable demands” which included the size of bonuses for loss-making units.The two sides held talks mediated by the government on Wednesday but were unable to reach a consensus.On Wednesday, union leader Choi Seung-ho said the union had accepted a final proposal presented by a government mediator, but the 18-day strike would go ahead as management had not come around on one remaining sticking point, Reuters reported.“I would like to apologise to the public for not being able to produce a good result despite making as many concessions as possible,” he said.“We will not cease our efforts to reach a deal even during the strike.”Samsung Electronics said that “accepting the labour union’s excessive demands would undermine the fundamental principles of company management”.Worker strikes at Samsung were rare until recently. In June 2024, it faced its first-ever industrial action following months of negotiations over pay, when some workers went on strike for one day and held a protest in Seoul, chanting: “Respect labour! We are not wanting a 6.5 percent raise or a 200...
Samsung union's strike threat fuels fears of South Korea's economic ...
Samsung Electronics’ biggest labour union is threatening to strike at the height of the global AI chip boom, turning a fight over bonuses into a test of how the industry’s windfall profits should be shared and sparking fears of an economic slowdown in South Korea.The union has warned it will stage an 18-day walkout from May 21 to June 7, raising concerns about production disruptions, customer defections and wider fallout across the global technology supply chain.The dispute comes as demand for artificial intelligence infrastructure has driven record profits at South Korean chipmakers, while intensifying pressure on Samsung to defend its leading position in the memory semiconductor market.Samsung Electronics and union representatives failed to reach an agreement on Wednesday after two days of government-led mediation talks, which were widely viewed as a last-ditch effort to avert a strike.The company expressed regret over the collapse of negotiations and said it hoped to continue “sincere dialogue” with the union.Union leaders, however, said they would not return to the negotiating table until after the planned strike unless Samsung Electronics made significant concessions.However, the company argued that allocating a fixed proportion of operating profits to employee bonuses could weaken its ability to invest during future downturns in the notoriously cyclical semiconductor industry.
Samsung Electronics set to face major strike on Thursday after union ...
Some 48,000 Samsung Electronics workers are set to walk off the job on Thursday after talks on bonus payments broke off without a deal - a strike which threatens the health of South Korea's economy and could hit global chip supply.Hopes for a deal in the not-too-distant future were kept alive, however, after discussions resumed late Wednesday afternoon, now mediated by Labour Minister Kim Young-hoon.Earlier in the day, union leader Choi Seung-ho told reporters that the union had accepted a final proposal presented by the head of the National Labor Relations Commission, but the 18-day strike would go ahead as management had not come round on one remaining sticking point."I would like to apologise to the public for not being able to produce a good result despite making as many concessions as possible," he said, bowing and holding back tears."We will not cease our efforts to reach a deal even during the strike."SAMSUNG SAYS DEMANDS ARE UNACCEPTABLESamsung said in a statement that the union had insisted on "unacceptable demands" that included the size of bonuses for loss-making units."The reason an agreement could not be reached .... is that accepting the labor union's excessive demands would undermine the fundamental principles of company management," it said.Samsung shares ended up 0.2% and have lost 2.8% for the week to date. Some investors have said they are more concerned about the prospects of a permanent spike in labour costs than they are about the one-off costs of the strike.EMERGENCY ARBITRATION OR NOT?Much attention will now turn to whether the government will step in and order emergency arbitration as it warned it might do at the weekend, citing the potential damage the strike could inflict on the economy.Samsung accounts for almost a quarter of South Korea's exports and is also the world's largest memory chip maker so production disruptions are likely to further fuel price rises at a time when the AI boom has caused shortages.An emergency arbitration order, which has been rarely employed, would put the strike on hold for 30 days while the government mediates talks.But a South Korean government official said on Wednesday that talk of emergency arbitration is premature and that there was still time for dialogue.CRITICISM FROM PRESIDENT LEEThe precise nature of the remaining sticking point was somewhat unclear.The union has demanded that Samsung abolish a cap on bonuses that stands at 50% of annual salaries, allocate 15% of annual operat...
Union calls strike at South Korea chip giant Samsung Electronics
South Korea's labour minister is set to mediate talks between Samsung and its union, the labour ministry announced Wednesday in a bid to prevent a strike called for Thursday. The threatened strike is expected to dwarf a 2024 walkout that drew about 6,000 workers at the world's top memory chipmaker. The dispute centres on profit-sharing at a key player in the global semiconductor supply chain, with its chips widely used in artificial intelligence systems and consumer electronics. The tech giant's shares have surged nearly 400 percent over the past year on the back of an AI boom, and saw its market capitalisation top $1 trillion for the first time in May. The union had called for the scrapping of a bonus cap set at 50 percent of annual salaries and for 15 percent of operating profit to be allocated to bonuses. "Around 10:00 pm on May 19, the labor union agreed to the mediation proposal put forward by the National Labor Relations Commission; however, management expressed its refusal," it said in a statement on Wednesday. "The labour union will lawfully commence a general strike tomorrow as scheduled." According to the union's lawyer, around 50,500 workers are set to walk off production lines for 18 days from Thursday following the breakdown of negotiations with management. Samsung's management said the talks failed because "acceding to the labour union's excessive demands would risk undermining the fundamental principles of the company's management". "Under no circumstances should a strike take place," it said. Concerns are growing within the South Korean government that a prolonged union strike could hurt the export-driven economy, with chips making up about 35 percent of exports. South Korea's presidential office voiced "deep regret" over the collapse of the talks, urging both sides to keep working toward an agreement given the strike's "potential repercussions for the Korean economy". Some experts say even a partial halt in Samsung's operations could prove damaging – though the union argues that production stoppages have already occurred in the past for reasons related to maintenance and equipment inspections. The government could invoke emergency mediation powers – a measure that could halt strikes or other industrial action and trigger mediation if they are deemed a threat to the national economy. Limited impact? But Tom Hsu, an analyst at Taipei-based research firm TrendForce, said the strike's potential impact may be limited. "Due to the high level of ...
