Samsung strike hits chip production

A sizeable number of the South Korean vendor's staff went on strike on Monday for three days, demanding better pay, amongst other things. The strike will now continue because company management has not agreed to hold talks, Reuters reported on Wednesday.

The strike has already disrupted production on certain chip lines, with equipment running more slowly, Lee Hyun-kuk, vice president of the National Samsung Electronics Union (NSEU), told the newswire.

Naturally, that's a message the union will be keen to convey; it's stated aim it to halt chip production lines altogether. And, equally as understandably, Samsung insists there has been no disruption at all thus far.

"Samsung Electronics will ensure no disruptions occur in the production lines. The company remains committed to engaging in good faith negotiations with the union," it said, in a widely circulated statement.

The truth is likely somewhere in the middle; it's hard to imagine that strike action involving as many as 6,500 staff would have no effect at all. Reuters quoted unnamed analysts as saying that would be difficult to verify claims of disruption without further details from the NSEU on which process had been impacted by its actions.

The union has not had as much support as it might have liked. While 6,500 striking workers is a large number, the NSEU has 30,000 members on the payroll at Samsung and is urging more to join the cause. It plans to hold engagement campaigns at cafeterias inside chipmaking plants producing 8-inch wafers and high-bandwidth memory (HBM) chips that are in high demand for use in AI processors and has been educating members on the need to strike, it said.

The union is calling for 3.5% pay rise, a day of additional leave to mark the founding of the union, and for greater equality in the company bonus system between executives and standard employees. Samsung has previously offered a 3% hike in pay, but the union is holding out for more, pointing to inflation.

Doubtless the union also had half an eye on Samsung's latest earnings statement, published late last week, in which it predicted a more than 15-fold increase in operating profit in the current quarter, compared with last year, and 23% revenue growth.

The vendor is benefiting from growth in the AI space, including an increase in the price of chips. It ranks fourth in the smartphone chips market, as the latest figures from Omdia show, but it's market share is holding fairly steady.

As yet, the strike action is probably not a major threat to Samsung's business. But it goes without saying that it's not great news for the vendor. It could do without disruptions in chip-making, and whether or not there has been any impact to date, a question mark remains over potential repercussions while the strike is in force.