As the global chip shortage intensifies, the labor dispute at South Korea's Samsung Electronics may add fuel to the "chip shortage". According to Samsung’s largest union organization, the National Samsung Electronics Union (NSEU), the company is voting on the largest strike plan in Samsung’s history. Once the vote is passed on Wednesday, chip production will be interrupted in May, which may cause tens of billions of dollars in losses to Samsung.
As the world's largest memory chip manufacturer, if a strike occurs at Samsung, it may have a major impact on Samsung's semiconductor business and exacerbate the bottleneck problem in global semiconductor supply, thereby inhibiting the supply of semiconductors in industries ranging from automobiles to computers to smartphones.
The largest strike in Samsung history is imminent
Earlier this month, the National Samsung Electronics Union (NSEU) officially launched its ten-day strike voting process, and the voting results will be released on Wednesday.
The vote marks the final breakdown of eight months of pay negotiations between Samsung's labor union and Samsung Group and paves the way for what could be the largest strike in Samsung's history.
Samsung Korea has a total of 125,000 employees, about 90,000 of whom have joined the NSEU union, and will all participate in the vote.
According to union leader Choi Seung-ho, workers plan to go on strike for 18 days starting on May 2 if they fail to reach an agreement with the group.That could affect about half of output at Samsung's semiconductor plant in Pyeongtaek, south of Seoul.
"I expect there will be production disruptions," Choi Seung-ho said.
According to sources in the Korean chip industry, there is indeed a possibility of shutdown of Samsung's storage production lines. Once the production line is shut down, it may take up to two months to restart the production line, and the losses may be as high as tens of billions of dollars.
A Samsung Group executive said production disruptions caused by even just one strike could damage trust relationships with customers and take years to recover.
The root of the problem is salary
The main reason why Samsung employees went on strike was dissatisfaction with their wages.
The head of Samsung's labor union said that Samsung's main competitor, South Korean chipmaker SK Hynix, accepted the salary reform request proposed by its union in September last year. This resulted in a widening pay gap between Samsung employees and SK Hynix employees, which made Samsung employees increasingly dissatisfied.
"The chip industry is booming, but these benefits have not benefited us, which is why we are fighting." The head of Samsung's labor union said bluntly.
According to SK Hynix's latest salary reform plan, the company has increased the bonus ceiling and used 10% of the company's operating profits to establish a bonus pool.
Samsung's labor union stated that according to Samsung's current salary system, a Samsung chip department employee (basic salary is 76 million won, approximately RMB 350,000) will receive a performance bonus of 38 million won (approximately RMB 175,000) in 2025, which is less than one-third of the bonus deserved by SK Hynix employees with the same salary level.
Moreover, judging from the current booming development of the chip industry, if Samsung's current bonus system continues to be implemented, the salary gap will further widen this year.
The head of Samsung's labor union said: "If we are the leader in the industry, we should receive the same treatment as the boss."
He also mentioned that in addition to SK Hynix, Tesla is also attracting chip design talents through favorable conditions. In February of this year, Tesla CEO Elon Musk publicly "sought talents" and encouraged employees in the Korean chip industry to apply for Tesla jobs, because Tesla is vigorously entering the field of artificial intelligence chips for self-driving cars and humanoid robots.
"Only by increasing wages can employees be motivated to work harder, thus enhancing Samsung's competitiveness," said the union leader.
Conflicts between company executives and labor unions
In the context of the widening pay gap, more than 100 Samsung union members have left Samsung in the past three months and switched jobs to peer companies.
The head of Samsung’s labor union said they hope Samsung can implement a reform plan similar to SK Hynix’s:Strive to increase the basic salary of Samsung employees by 7%, remove the bonus cap, and introduce a bonus pool system based on operating profits.
But Samsung executives still seem unwilling to raise their salaries so high.
At the beginning of this month, Samsung sent an internal memo to employees stating that the company was trying to reach a 2026 salary agreement by proposing an "unprecedented" salary package. The proposal included a 6.2% salary increase and special bonuses for memory chip department employees. According to sources,Samsung executives have expressed adamant reluctance to lift bonus caps.
"As profits from the semiconductor business fluctuate significantly depending on market conditions, Samsung will allocate operating profits to future investments, shareholder returns and employee compensation in a balanced manner," a Samsung spokesman said.
According to Seo Ji-yong, a professor of business administration at Sangmyung University in South Korea, Samsung only began to introduce the union system in 2020, so the group has not faced risks posed by labor unions for a long time, unlike other large Korean industrial groups (such as Hyundai Motor), which has led to its lack of experience and expertise in managing labor relations.
He bluntly said: "If Samsung's management remains complacent and ignores the union's demands, these disputes may pour cold water on Samsung's earnings growth momentum."