Samsung, union resume negotiations with minister mediating

SEOUL – Samsung Electronics and its workers’ union resumed talks on May 20 with South Korea’s labour minister mediating, after earlier talks aimed at averting a strike collapsed.

Workers at the world’s top memory chipmaker had been due to begin a strike on May 21 after talks over bonuses failed, raising concerns that production of crucial semiconductor chips could be hit.

The planned walkout is expected to dwarf a 2024 strike that drew about 6,000 workers, as anger flares among staff over how the company distributes its massive profits from an artificial intelligence-fuelled boom.

But negotiations between management and the union would be mediated by the labour minister, the ministry said later on May 20.

Samsung reported a roughly 750 per cent jump in first-quarter operating profit year‑on‑year, while its market capitalisation top US$1 trillion (S$1.28 trillion) for the first time in May.

The union had called for the scrapping of a bonus cap set at 50 per cent of annual salaries and for 15 per cent of operating profit to be allocated to bonuses.

“Around 10.00pm on May 19, the labour union agreed to the mediation proposal put forward by the National Labour Relations Commission; however, management expressed its refusal,” it said in a statement on May 20.

“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 May 21, 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”.

The stand-off has raised concerns in South Korea, where semiconductors account for about 35 per cent of exports and are a key pillar of the economy.

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 economic impact.

President Lee Jae Myung also told a Cabinet meeting that collective labour action should remain within “certain limits”.

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 Mr 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 automation in front-end facilities, TrendForce expects Samsung’s DRAM and NAND Flash production to remain at full capacity,” he told AFP.

“Any potential impact from the strike is likely to be confined to non-memory business segments.”

A Suwon court this week granted Samsung Electronics an injunction requiring staffing and operations to be maintained at normal levels during any walkout.

Mr Kim Sung-hee, director of Workers’ Institute for the Industrial and Labour Policy, said that while the strike could cause losses, “they are unlikely to be irreversible”.

The strike does not mean it would “automatically trigger an economic crisis,” he told AFP.

Samsung Electronics shares inched up 0.18 per cent by the close in Seoul on May 20.

AI boom

Samsung is a major producer of chips used in everything from artificial intelligence to consumer electronics, raising the prospect that the planned strike could cause severe disruption and losses.

The company said in 2026 it had begun mass production of next-generation high-bandwidth memory chips, HBM4, seen as a key component for scaling up the vast data centres needed for AI development.

The dispute unfolds against the backdrop of an AI boom that is benefiting South Korean tech groups, boosting national growth and the stock market.

Both Samsung and its domestic rival SK hynix posted record profits in the first quarter, driven by global demand for AI chips.

Long staunchly anti-union, founder Lee Byung-chul once vowed never to allow unions “until I have dirt over my eyes”.

He died in 1987. Samsung Electronics’ first labour union was formed in the late 2010s. AFP