Samsung Workers Threaten Strike That Could Worsen Global Chip Shortage

The largest workers' union at Samsung Electronics is planning an 18-day strike in May that could disrupt semiconductor production at the world's biggest memory chip manufacturer. The labor dispute stems from worker frustration over pay gaps with competitors, potentially worsening global chip supply bottlenecks.

Workers at Samsung Electronics are preparing for a potential strike that could severely impact global semiconductor supplies, according to the head of the company’s largest labor union.

The Samsung Electronics Labour Union (SELU) is moving forward with plans for an 18-day work stoppage beginning May 21, pending ongoing negotiations with management. Union members are currently voting on the strike proposal through Wednesday.

“I expect there would be production disruption,” stated Choi Seung-ho, who leads the union representing thousands of Samsung workers.

The proposed strike could affect approximately half of the production at Samsung’s massive semiconductor facility in Pyeongtaek, located south of Seoul. This disruption comes at a critical time when global chip demand for artificial intelligence data centers has already strained supplies across multiple industries, from automotive to smartphones and computers.

Samsung, as the world’s leading memory chip producer, plays a crucial role in the global semiconductor supply chain. Any significant production halt could worsen existing supply bottlenecks affecting various technology sectors.

The labor dispute centers on compensation disparities between Samsung and its competitors. Workers have grown increasingly frustrated after rival chipmaker SK Hynix agreed to significant compensation reforms last September, including lifting bonus caps and dedicating 10% of operating profits to employee bonuses.

“The chip industry is booming, but those gains aren’t trickling down to us. That’s why we’re fighting,” Choi explained.

The union is demanding a 7% increase in base wages, elimination of the current 50% cap on performance pay relative to annual base salary, and implementation of a profit-sharing bonus system to replace what they describe as outdated compensation criteria.

Employee frustration has led to significant turnover, with more than 100 union members leaving Samsung for competitors like SK Hynix in recent months, according to Choi.

The union represents roughly 66,000 members, including 51,000 from Samsung’s chip division. About 90,000 unionized employees from Samsung’s 125,000-person South Korean workforce are eligible to participate in the strike vote.

Samsung has attempted to address worker concerns through what the company called “unprecedented” compensation proposals in an internal memo earlier this month, including a 6.2% pay increase and special bonuses. A company spokesperson indicated Samsung would continue engaging with employees “in a sincere manner.”

However, company officials express concern about the financial implications of removing bonus caps, citing the need to fund future investments in the capital-intensive semiconductor industry.

“If even a single strike halts production lines and damages trust with customers, it could take years” to recover, warned a Samsung official who requested anonymity due to the sensitive nature of the negotiations.

The current labor tensions represent a significant shift for Samsung, which maintained a “no-union” policy until Chairman Jay Y. Lee pledged to change that approach in 2020. The company’s first worker walkout occurred in 2024.

Business administration professor Seo Ji-yong from Sangmyung University noted that Samsung lacks experience managing labor relations compared to other major Korean industrial groups like Hyundai Motor.

“If the management is stuck in the past and ignores union demands, the disputes could throw cold water on Samsung’s earnings momentum,” Seo warned.

The compensation gap between Samsung and its competitors has become a significant recruitment challenge. According to union calculations, a Samsung chip division employee earning a base salary of 76 million won ($50,800) would receive 38 million won in performance pay for 2025, compared to significantly higher compensation for similarly-paid SK Hynix employees.

The competitive pressure extends beyond traditional rivals, with Tesla CEO Elon Musk recently encouraging Korean chip industry workers to apply for positions at his company as it expands into AI chips for autonomous vehicles and robotics.

“If we’re number one, we should be treated like number one,” Choi emphasized, arguing that better compensation would motivate employees and strengthen Samsung’s competitive position.

Samsung reported record fourth-quarter profits in 2025, with analysts projecting annual operating profits could more than quadruple to exceed 200 trillion won ($134 billion) this year, highlighting the financial success that workers want reflected in their compensation packages.