Samsung Electronics and union extend talks to avert strike threatening global supply chains

By Heekyong Yang and Hyunjoo Jin

SEJONG, South Korea, May 18 (Reuters) – Samsung Electronics and its labour union plan to hold more talks on Tuesday in a bid to avert the biggest strike in the tech giant’s history, amid concern that a walkout by more than 45,000 workers could hit South Korea’s economy and disrupt global supply chains.

The threatened 18-day strike starting on Thursday comes amid an acute global shortage in memory chips, which are essential components in AI data centres, smartphones and laptops. The shortage has fueled soaring profits at Samsung and its peers in recent months.

Monday’s talks followed the collapse last week of a first round of government-mediated negotiations over pay and bonuses at the world’s largest memory chipmaker, which accounts for nearly a quarter of South Korea’s exports.

A union representative said that talks would continue on Tuesday, adding that it had been “engaging in negotiations in good faith.”

Park Su-keun, chairman of the National Labor Relations Commission, also said that talks would resume on Tuesday after noting that the two sides remained far apart on Monday.

The union has demanded Samsung abolish a bonus cap of 50% on annual salaries and allocate 15% of annual operating profit to a bonus pool shared by workers and formalise this in contracts.

Samsung proposed assigning 9%-10% of its annual operating profit to a bonus should that exceed 200 trillion won this year, while sticking to the 50% bonus pay cap, the union said.

SHARES UP ON COURT INJUNCTION

Adding to pressure on the union, a South Korean court partially granted Samsung’s request for an injunction to prevent illegal labour actions during the strike.

The ruling means thousands of workers may be required to show up at work in the event of a strike to prevent some production materials and facilities from being damaged. About 47,000 workers said they would join the walkout.

A court spokesperson said the two main unions could face fines of 100 million won ($72,000) per day each if they failed to comply, while union leaders could be fined 10 million won per day.

The union said in a statement the court ruling would not dissuade it from pursuing a strike if talks did not achieve a deal, but pledged to engage seriously in negotiations.

Samsung Electronics declined to comment.

Samsung Electronics shares rose as much as 6.7% in morning trade after the court’s ruling, before ending up 3.88%, still ahead of a 0.31% rise in the benchmark KOSPI index.

South Korean government officials have increasingly voiced worries about a strike, warning it could pose significant risk to economic growth, exports and financial markets.

President Lee Jae Myung, who is a former rights lawyer and is seen as leading a union-friendly government, said in a post on X on Monday that management rights should be respected as much as labour rights.

CHIPS FEEDING AI BOOM

South Korean Prime Minister Kim Min-seok said on Sunday the government would pursue all options, including emergency arbitration, to prevent a strike.

An emergency arbitration order, which can be invoked by the labour minister if it is deemed that a dispute is likely to harm the economy or daily life, immediately prohibits industrial action for 30 days while the National Labor Relations Commission conducts mediation and arbitration.

The union has said it would not give in to pressure on arbitration and would not agree to a pay deal should the company offer a less favourable proposal.

After the collapse of negotiations last week, executives from Samsung’s chip division urged the union to refrain from striking, citing concerns raised by hard-won semiconductor customers such as Nvidia, according to media reports.

The executives said some customers had indicated they might temporarily stop accepting shipments during a strike because they could not guarantee product quality, according to the reports, citing a participant at the meeting.

Samsung declined to comment on the matter.

(Reporting by Heekyong Yang, Heejin Kim, Jack Kim and Hyunjoo Jin, Cynthia Kim; Additional reporting by Joyce Lee; Editing by Ed Davies)