Escalation of Situation! Samsung Electronics Union Announces Indefinite Comprehensive Strike

The dispute between Samsung Electronics, the world's largest storage chip manufacturer, and its largest labor union has escalated once again, with the union announcing an indefinite strike decision. Samsung may face the risk of production interruptions.

After negotiations last month regarding wages and vacation time broke down, the Samsung Electronics union spent weeks preparing for the strike. Earlier this week, thousands of workers gathered outside Samsung's chip manufacturing center in southern Seoul, planning a three-day strike to demand higher wages. On July 10th, according to the latest reports from the media, the Samsung union with over 30,000 employees stated their readiness to extend the strike indefinitely.

This is the largest organized labor action in Samsung's half-century history. It is unclear how many people will respond to the union's call, with concerns that this action could potentially harm South Korea's most prominent company like a snowball effect, or trigger similar reactions in the recovering technology and chip industry.

On Wednesday, Samsung fell slightly by 0.3% on the Seoul stock market, and suppliers including Wonik IPS, TES, and Soulbrain Holdings also experienced declines.

In a statement on its website, the Samsung Electronics union pointed out, "Management has no intention of engaging in dialogue... We have clearly determined the production line production interruption, and the company will regret this decision." Union leaders stated that the action aims to meet their demands by disrupting production at the company's most advanced chip facilities.

Although much of Samsung's production is automated, strikes are bound to hinder the company's production. Samsung stated in its declaration that it will ensure that the production line does not experience interruptions and mentioned that it will continue to engage in sincere negotiations with the union.

Lee Seung-woo, head of the Eugene Investment Securities Research Center in South Korea, stated that the market is more concerned about how quickly Samsung can obtain approval for Nvidia's HBM supply, and is "hardly interested" in the strike. However, due to the potential production interruptions that could drive up chip prices, it is difficult to assess its impact on earnings.

This major strike also coincides with Samsung's largest product launch event of the year in Paris, where new foldable phones and smartwatches with artificial intelligence and health tracking features are expected to be unveiled.

Previously, Samsung announced a 15-fold increase in operating profit for the quarter ending in June, reflecting a rebound in memory chip demand and a surge in investment in artificial intelligence infrastructure