Samsung union strike: 48,000 workers threaten 18-day walkout over bonuses

Samsung Electronics faces its largest-ever strike as nearly 48,000 workers plan to walk off production lines for 18 days starting Thursday, escalating a dispute over bonus payouts.

The union is demanding the abolition of a cap that limits bonuses to 50% of annual salaries and the allocation of 15% of annual operating profit to a bonus pool distributed to workers. It also seeks binding changes beyond this year.

Samsung countered with a different proposal.

Transcripts of negotiations show Samsung cited estimates that staff at smaller rival SK Hynix could receive bonuses equivalent to 607% of annual salary. Samsung proposed that its memory chip workers would receive bonuses exceeding that level.

Samsung also proposed bonuses of 50% to 100% for staff in its logic chip businesses.

However, these bonuses would be one-off payments for this year. In principle, Samsung does not want to abolish the cap on bonuses at 50% of annual salaries.

Both Samsung and SK Hynix have seen profits surge to record highs due to a global memory chip shortage fueled by the artificial intelligence boom. The two companies dominate global memory production.

Last year, SK Hynix abolished its cap on bonus pay for 10 years, according to media reports. Samsung’s union said this resulted in bonuses more than three times higher than those offered to Samsung workers, prompting many to jump ship and sparking a surge in union membership.

The planned strike is far larger and more damaging than the last walkout in 2024, when about 6,000 workers participated.

Samsung’s union says nearly 48,000 employees, the majority chip workers, have signed up to participate, representing 38% of Samsung Electronics’ domestic workforce.

A court on Monday partially granted Samsung’s request for an injunction, ruling that essential staffing levels at some production facilities must be maintained during any industrial action. Samsung notified the union that this requires 7,087 workers to report even if the strike proceeds.

Samsung’s chip factories in South Korea operate 24 hours daily across three shifts at locations including Pyeongtaek and Hwaseong.

The strike threatens to dent memory chip supply during a period of severe shortages.

Samsung is the world’s largest DRAM chip maker, commanding 36% of the market as of end-2023, according to TrendForce. Memory chips, essential for laptops and smartphones, have become critical for AI data centers.

Jeff Kim, a KB Securities analyst, estimated that an 18-day strike could disrupt global DRAM supply by 3% to 4% and NAND memory supply by 2% to 3%, likely fueling further price increases.

South Korean government officials have warned about the strike’s impact, as Samsung accounts for nearly a quarter of the country’s exports.

An official at South Korea’s central bank has said that a strike could, in a worst-case scenario, shave 0.5 percentage points off a forecast 2.0% expansion in the South Korean economy this year.

This assumes that about 30 trillion won ($19.9bn) of chip production could be lost and that there might be an additional ‘few weeks’ of disruption to production, the person said.