By Hyunjoo Jin and Heekyong Yang
PYEONGTAEK, South Korea, April 23 (Reuters) – Tens of thousands of Samsung Electronics workers rallied at a sprawling factory complex south of Seoul on Thursday, venting their anger over compensation levels ahead of a planned lengthy strike that could disrupt AI chip production.
Union organisers and police put the number of protesters at 40,000, making the demonstration the largest to date for Samsung, which has long been known for its union-busting tactics but saw workers walk out for the first time in 2024.
Should their demands not be met, they plan to strike for 18 days from May 21. That could delay shipments to customers, push up chip prices further and benefit rivals.
MANY WORKERS SAID TO LEAVE FOR RIVAL
Chief among workers’ grievances is what they call a massive gap in bonus pay with rival SK Hynix, which beat Samsung to the punch in delivering high bandwidth memory for artificial intelligence chip units to Nvidia and other clients following the release of ChatGPT in late 2022.
That said, the AI boom has also helped Samsung’s profits surge to record levels.
“In reality, many employees are leaving for SK Hynix,” said Song Yong-gi, 39, who handles logistics tasks for an assembly line in Samsung’s chip division.
“At the end of the day, more than 90% of employees work for pay, and the compensation gap has become so wide that it’s driving these moves,” Song said.
Other Samsung workers, who gathered in black vests for the mass sit-in at the Pyeongtaek campus, many carrying signs that listed their demands, also said large numbers of their colleagues had left for SK Hynix.
In somewhat shocking behaviour given Samsung’s conservative top-down corporate culture, workers walked over a large banner with the faces of Chairman Jay Y. Lee and other executives. Nicknames written on the banner mocked them for being cheap, haughty and at fault.
The Samsung Electronics Labour Union argues that a chip division employee with a base pay of 76 million won ($51,280) would receive 38 million won in bonus pay for 2025, or less than a third of the figure a similarly paid SK Hynix employee would qualify for.
Samsung said it would continue to make efforts to reach a swift agreement in wage negotiations.
A Samsung official speaking on condition of anonymity has said that production halts caused by “even a single strike” could damage trust with customers and take years to recover from.
WORKERS WANT CAP ON BONUS PAY SCRAPPED
SK Hynix in September accepted its union’s demand for compensation reform and hefty bonuses, fueling Samsung employees’ frustration over the pay gap and sparking a surge in union membership.
Union members now number more than 90,000, representing over 70% of Samsung’s South Korean workforce.
One of the most contentious issues is a union demand to scrap a cap on bonus pay, currently set at 50% of annual base salary, which management has rejected. SK Hynix agreed to eliminate the cap on bonus pay, Samsung union officials said.
Samsung’s union is also demanding a 7% hike in base salaries, that 15% of annual operating profit be allocated as bonus pay and more clarity on how bonus pay is calculated.
Management has, however, offered 10% of operating profit for performance pay and additional funding to ensure memory division employees receive higher payouts than competitors this year.
“This is a watershed moment for Samsung’s labour relations,” said Park Ju-gun, head of corporate analysis firm Leaders Index.
He predicted that the two sides would likely reach a compromise because public opinion could turn against the unions if there was a prolonged strike.
Thursday’s protest appeared to have had little effect on investor sentiment. Samsung’s shares rose 3% to a record close, bolstered by a surge in quarterly profit for SK Hynix to a historic high.
($1 = 1,482.0700 won)
(Reporting by Hyunjoo Jin and Heekyong Yang; Additional reporting by Hong-ji Kim, Jungmin Ryu and Joyce Lee; Editing by Ed Davies, Miyoung Kim, Brenda Goh and Edwina Gibbs)
