Samsung faces risk of chip disruption after labour talks collapse

[SEOUL] Talks between Samsung Electronics and its largest labour union broke down, with the union telling local media it will go ahead with a work stoppage as planned, which looks set to disrupt operations at the world’s largest memory chipmaker.

Days of stop-and-start negotiations failed to yield progress, putting the union on track to begin a strike on Thursday (May 21), Yonhap reported. Samsung faces the prospect of production delays as well as complications in accelerating the development of its next-generation semiconductors.

The collapse in negotiations puts the entire global technology supply chain at risk because Samsung is the world’s biggest supplier of the chips that go into devices from data centre servers to smartphones and electric vehicles. The dispute also underscores simmering tensions across South Korea as workers push for a greater share of the profits that companies such as Samsung and SK Hynix are deriving from a global AI infrastructure boom.

The union is demanding that Samsung scrap an existing bonus cap, allocate 15 per cent of its operating profit to worker bonuses and formalise those terms in employment contracts. Labour leaders pointed to SK Hynix, which last year agreed to allocate 10 per cent of annual operating profit to a performance bonus pool.

Samsung had proposed allocating 10 per cent of operating profit to bonuses, along with a one-time special compensation package that exceeds industry standards. Company executives argued that the union’s demands would be difficult to sustain over the long term.

“There are mounting concerns that any significant production disruptions or operational uncertainty at Samsung Electronics could place additional strain on the global memory semiconductor market, potentially worsening supply bottlenecks, price volatility, procurement uncertainty and broader supply chain instability,” the American Chamber of Commerce in Korea said in a statement this month.

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The Bank of Korea forecasts that the strike could lead to as big as a 0.5 percentage point cut in South Korea’s GDP growth this year, local media reported. BLOOMBERG