What are Samsung union workers demanding and how might a strike play out?

The emblem of the Samsung Electronics Co. is seen throughout a media tour at Samsung Electronics’ headquarter in Suwon, South Korea, Jun. 13, 2023. AP-Yonhap

SEOUL — South Korean reminiscence chip maker Samsung Electronics is going through its worst-ever strike, with practically 48,000 employees threatening to stroll off manufacturing strains on Thursday for 18 days over a dispute about bonus payouts.

Listed here are key issues to know:

What does Samsung’s union need?

Samsung’s union has requested the corporate to abolish a cap that limits bonuses to 50 p.c of annual salaries and to allocate 15 p.c of annual working revenue to a bonus pool that might be distributed to employees. It additionally desires Samsung to make the adjustments binding past this 12 months.

Samsung made a really totally different provide.

Transcripts of negotiations between the union and Samsung confirmed that in March, Samsung cited estimates that some workers at smaller rival SK Hynix may obtain bonuses equal to 607 p.c of their annual wage and proposed that its reminiscence chip employees would acquire a bonus exceeding ranges that SK Hynix employees obtain.

Samsung additionally proposed bonuses of fifty p.c to one hundred pc for workers in its logic chip companies.

These bonuses, nevertheless, could be a one-off fee for this 12 months. In precept, it doesn’t need to abolish the cap on bonuses at 50 p.c of annual salaries.

What’s driving this?

Samsung and SK Hynix have seen earnings balloon to report highs because of a worldwide scarcity of reminiscence chips amid the increase in synthetic intelligence. The 2 firms account for almost all of world reminiscence manufacturing.

Final 12 months, SK Hynix abolished its cap on bonus pay for 10 years, media stories stated. This resulted in bonuses greater than thrice increased than these provided to Samsung employees, prompting many to leap ship for SK Hynix and sparking a surge in union membership, in response to Samsung’s union.

How may the strike play out?

The strike guarantees to be far bigger and extra damaging than the final walkout to have an effect on Samsung in 2024, when about 6,000 employees took half.

Samsung’s union says that almost 48,000 staff, nearly all of them chip employees, have signed as much as take part. That represents 38 p.c of Samsung Electronics’ home work power.

A courtroom on Monday partially granted Samsung’s request for an injunction, ruling that important staffing ranges at some manufacturing amenities should be maintained throughout any industrial motion. Samsung has notified the union that this can require 7,087 employees to report for work even when the strike goes forward.

The corporate’s chip factories in South Korea function 24 hours a day throughout three shifts in places corresponding to Pyeongtaek and Hwaseong.

Why is that this strike inflicting such concern?

The strike threatens to dent the provision of reminiscence chips at a time of extreme shortages.

Samsung is the world’s largest maker of DRAM chips, commanding 36 p.c of the market as of the tip of final 12 months, in response to analysis agency TrendForce. Reminiscence chips, key parts in laptops and smartphones, have turn into important constructing blocks for AI information centres.

KB Securities analyst Jeff Kim has estimated that an 18-day strike may disrupt world provides of DRAM reminiscence by 3 p.c to 4 p.c and NAND reminiscence by 2 p.c to three p.c, which might probably gasoline additional value will increase.

South Korean authorities officers have additionally warned in regards to the affect of a strike as Samsung accounts for practically 1 / 4 of Korea’s exports.

An official at South Korea’s central financial institution has stated {that a} strike may, in a worst-case situation, shave 0.5 share factors off a forecast 2.0 p.c growth within the South Korean economic system this 12 months.

This assumes that round 30 trillion gained ($19.9 billion) of chip manufacturing could possibly be misplaced and that there may be a further “few weeks” of disruption to manufacturing, the individual stated. ($1 = 1,505.9000 gained)