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Samsung union’s indefinite strike raises concerns for semiconductor industry

The ongoing indefinite strike by the National Samsung Electronics Union (NSU) is raising significant concerns about potential disruptions in semiconductor production and its broader implications for South Korea’s economy and global competitiveness.

On Jul. 10, the National Samsung Electronics Union (NSU), which had begun a general strike two days earlier, announced that the strike would continue indefinitely.

Initially, the NSU planned a first phase strike for three days starting on Jul. 8, followed by a second phase strike for five days beginning on Jul. 15. However, they unexpectedly decided to extend the strike indefinitely.

Currently, there are five unions within Samsung Electronics, but only the NSU is on strike. Among the approximately 125,000 employees of Samsung Electronics, around 31,000 are union members of the NSU, with about 90% belonging to the Device Solutions (DS) division, which manufactures semiconductors.

According to company estimates, about 3,000 employees are participating in the strike, while the union estimates around 6,500. The NSU is demanding a 5.6% annual salary increase, higher than the labor-management council agreement (5.1%), and changes in the performance bonus criteria.

The low number of strike participants makes it unlikely that semiconductor production will be significantly disrupted. However, the foundry (contract semiconductor manufacturing) sector may suffer from a loss of trust, making it difficult to attract customers.

However, concerns are rising that the competitiveness of the S. Korean semiconductor industry could be damaged by the union strike amid fierce global competition from the U.S., Japan, Taiwan, and Europe.

Semiconductors, a strategic industry of the nation, substantially impacts S. Korean investment, employment, and production. In the first half of this year, they accounted for the highest proportion (20%) of exports.

As a result, significant taxpayer money has been invested in creating advanced semiconductor facilities. Last year alone, Samsung Electronics received an estimated 6.7 trillion won ($4.8 billion) in tax benefits, according to the Narasallim, the fiscal reform research institute.

Considering Samsung Electronics’ recent struggles in the AI semiconductor sector, the union strike worsens the situation. An industry insider stated, “The union, with an average annual salary of more than $86,000, is trying to impose its demands by taking the company and the national economy hostage.”

The NSU has been live-streaming the strike activities on social media since the general strike began on Jul. 8. Union members cheered when messages like “Foundry production halted” and “Quality issue at line 15″ appeared in the chat.

The NSU has openly stated that the strike’s goal is to disrupt production. Through social media broadcasts, the NSU has also revealed plans to focus on absenteeism struggles for the “8-inch line,” which requires a lot of manual labor due to low automation, and later encourage participation in the strike for the HBM (High Bandwidth Memory) line at the Pyeongtaek plant.

According to the company, the production disruptions claimed by the union are not occurring on the ground. The company is minimizing the impact of the strike by adjusting workforce assignments.

However, as the news of the strike spreads through foreign media, there are growing concerns about difficulties in attracting foundry customers. An industry insider noted, “In semiconductors, delivering the desired products on time is crucial. Global customers are likely monitoring this strike closely, worried about its impact on yield rates (the ratio of normal product production) and delivery schedules.” Chosun

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