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Escalating Labor Protests at Samsung's Cutting-Edge AI Chip Plant
Samsung Electronics’ largest union is urging employees at a high-tech AI memory chip plant to go on strike, shifting their strategy after their push for increased wages began to falter. This week, several hundred employees protested at Samsung’s high-bandwidth memory plant in Pyeongtaek, south of Seoul. Although these numbers are significantly lower than the thousands who rallied earlier at Samsung’s main facility in Hwaseong, union leaders are now focusing on this strategically critical site to intensify the pressure on management.
Pyeongtaek is pivotal to Samsung's bid to secure a foothold in a critical market, as the company seeks to persuade Nvidia to adopt its high-bandwidth memory. This is essential if Samsung hopes to rival smaller competitor SK Hynix in the rapidly expanding AI sector. Targeting the high-end chip production line is seen as "the most effective" move against management, according to Lee Hyun-kuk, deputy secretary-general of the union.
Amid a broader decline in Asian technology stocks, shares of Samsung fell as much as 4% in Seoul, marking their biggest intraday drop in over two months. Despite the reduced turnout for protests, this week’s strikes have become the most extensive labor protests in Samsung’s 50-year history, with its largest union of over 30,000 workers declaring a general strike on Thursday. Samsung insists that production impact remains minimal and expresses a commitment to resuming negotiations with the union, stating the company “is producing as planned and has not incurred any problems meeting or responding to customer needs.”
There is uncertainty over how many employees will ultimately join the strike, but concerns loom that escalating actions could damage Samsung’s operations or inspire similar strikes across the tech and chip industries. Son Woo-mok, head of the National Samsung Electronics Union, reported significant disruptions at factories due to idle equipment following staff walkouts. However, he did not specify how many workers might join the strike.
Despite Samsung’s claims of no production disruption, Son disputes this, citing numerous reports of equipment shutdowns due to an insufficient workforce. He points to potential quality issues arising from backlogged inspections crucial for semiconductor parts production.
Initially, the labor union aimed its efforts at production lines using 8-inch silicon wafers, which are more labor-intensive and constitute a minor segment of Samsung’s overall semiconductor output. Although much of Samsung’s production is automated, the company cannot afford any manufacturing hiccups, especially at this critical juncture. Samsung’s stock fell 3.7% on Friday following the general strike call, having remained relatively stable the previous day.
Potential Internal Issues and Quality Concerns
Son asserts that quality inspections and other essential tasks are significantly backlogged, potentially leading to quality issues in semiconductor production. The ongoing labor unrest poses considerable challenges for Samsung as it navigates this crisis and endeavors to maintain its position in the competitive AI and semiconductor market.
