Samsung Electronics union in South Korea stages first walkout

A workers' union at Samsung Electronics staged its first walkout on Friday, signalling more assertiveness among employees just as South Korea's most powerful conglomerate races to catch up in chips used in artificial intelligence.

The National Samsung Electronics Union (NSEU), whose roughly 28,000 members make up over a fifth of the firm's workforce, said it would stop work for a day to demand better pay.

The walkout is unlikely to immediately impact semiconductor production or shipments but will add pressure on Samsung Electronics as it chases AI and narrows a gap in contract chip manufacturing with Taiwan's TSMC analysts said.

"The purpose of today's strike action is to have meaningful conversation with management," NSEU official Lee Hyun-kuk told Reuters. He said the union was preparing further action on Friday, without providing details.

Samsung Electronics said there was no impact on production or business activity. The strike fell a day after a public holiday and there were fewer employees on annual leave than on the equivalent day last year, the firm said.

The union did not disclose how many members participated in the strike through annual leave.

"We have sincerely engaged with the union and will continue talks with them," said a company official.

Samsung Electronics' share price closed down 0.1%, versus a 1.2% rise in the benchmark KOSPI.

The walkout is unlikely to impact DRAM or NAND flash memory production or lead to shipment shortages as manufacturing is highly automated, said market researcher TrendForce.

Moreover, the walkout appears to involve more workers from the firm's Seoul headquarters than in production and was planned for a single day, TrendForce said.

The strike follows other worker protests in recent weeks outside offices in Seoul as well as outside a chip production site in Hwaseong, south of the capital.

They started after Samsung Electronics decided to increase wages this year by 5.1%. The NSEU, the biggest of five unions at the firm, want further commitments such as improvements to the performance-based bonus system and an extra day of annual leave.

Last week, a coalition of five unions at Samsung affiliates including another smaller Samsung Electronics union called on the NSEU to pursue negotiation rather than confrontation, indicating they would not join the strike.

Samsung Electronics' run of success is being challenged in some areas, including in some cutting-edge chips. It recently replaced the head of its semiconductor unit to navigate what it called a "crisis" affecting the industry.

Any larger scale or protracted industrial action would be a headache for the world's biggest memory chip maker as it scrambles to catch up with rivals making high bandwidth memory (HBM) chips used in AI applications.

SK Hynix and Micron are already supplying HBM chips to Nvidia which commands about 80% of the global graphic processing unit (GPU) market for AI applications.

Nvidia said this week that the three chip makers will provide HBM chips to the U.S. firm, though SK Hynix remains its primary supplier.

Last month, Reuters reported that Samsung's HBM chips were yet to pass Nvidia's tests for use, which analysts see as a crucial milestone both reputationally and in terms of profit momentum.

While struggling in parts of its chip business, Samsung dethroned Apple to become the top smartphone seller globally in the first quarter, accounting for 20% of shipments, according to research firm Counterpoint.

Union membership increased rapidly after Samsung in 2020 pledged to end to its practice of discouraging the growth of organised labour.

Union officials said, among younger employees, there is growing perception that unions can help create a fairer workplace, whereas older generations felt unions could disrupt productivity.

Overall, South Korea's union membership rate has hovered around 10% since 2004, labour ministry data showed.