Samsung Electronics or to welcome the first general strike in 53 years, can the industrial chain shock be avoided?

Text | Jaly

At a time of chip shortage, South Korea's Samsung Electronics, the world's largest semiconductor company, may usher in the first worker strike since its establishment 53 years ago.

According to media reports, due to the failure to reach an agreement with management on the 2021 salary issue, the Samsung Electronics Union recently filed an arbitration application with the National Labor Relations Commission of South Korea. If the arbitration agreement cannot be reached within 10 days, the union will have the legal right to strike.

In this regard, the relevant person in charge of Samsung China said in an interview with the Securities Daily reporter: "(The incident) does not affect Samsung's business in China at present. ”

Samsung Electronics' semiconductor business revenue surpassed Intel in 2021, thus becoming the world's number one semiconductor manufacturer. If workers strike and some production is interrupted, under the situation of chip supply shortage, it will undoubtedly have a greater impact on the relevant industrial chain and related enterprises.

Why face a massive "strike"?

The Samsung Electronics Union recently issued a statement saying that due to the failure to reach an agreement with Samsung executives on the salary issue, it has submitted arbitration to the National Labor Relations Commission of South Korea and will have the right to strike in the future.

It is reported that the first negotiation began in October last year, Samsung Electronics Union proposed that the company should increase the annual salary of each employee, take out 25% of the group's operating profits to pay bonuses to employees, special leave rights and other requirements.

It is understood that the program is for all employees of Samsung Electronics. At present, Samsung Electronics has a total of 114,000 employees. The Samsung Electronics Union has about 4,500 union members, accounting for about 4% of the total number of employees of Samsung Electronics.

However, this request ultimately failed to get a positive response from Samsung's management.

According to relevant news, the two sides of the negotiation are currently in a state of stalemate, and the Samsung Electronics Union is trying to break this situation with a strike. Samsung Electronics management said it would continue negotiations with workers but refused to accept the union's demands. The union representative said: "We perceive that the negotiations can no longer be carried out, and the actions we will take in the future depend on Samsung's willingness to negotiate." ”

The outbreak of this incident was not accidental. The rapid development of the semiconductor industry in the past two years has benefited Samsung for many years. In 2021, Samsung's semiconductor business achieved tremendous revenue growth, surpassing Intel at one point with a scale of $73.1 billion. "In the context of the company's abundant income, whether the salary and benefits of Samsung's basic employees match the substantial growth of the business is a question that Samsung employees have always been worried about." A person close to Samsung Electronics said.

However, the senior management of Samsung Electronics has benefited from the performance growth dividend, and the salary has increased significantly in recent years. According to reports, the total compensation of Samsung Electronics' 11 directors in 2020 reached 33.7 billion won (about 195 million yuan), double that of 2019. In 2020, Samsung Electronics' operating profit reached 36 trillion won at a high level. The operating profit in 2021 will reach 51.63 trillion won.

"The large-scale strike that Samsung may face this time is ultimately due to the shortcomings of its management system and the problems at the operational level. Samsung has always adopted a family-style management method, lacking an international and transparent management model, and is internal in terms of salary system and appraisal method. Samsung's senior salary has always been at a high level, and in recent years, it has doubled, but the grass-roots employees have not changed much, and it is difficult to implement incentive rules. All along, the compensation of Samsung employees has been based on the high growth of performance, and once there is a problem with performance, it will directly affect the treatment. Jiang Han, a senior researcher at Pangu Think Tank, told the Securities Daily reporter.

Ding Shaojiang, founder of Nail Technology, believes that "from the perspective of an unbalanced compensation system, Samsung does not pay attention to the interests of basic employees in terms of salary incentives. At the same time, this time, Samsung did not balance the relationship between the future development of the enterprise and the actual interests of employees, and there are still major deficiencies in the timely response to the demands of front-line employees, so that it can only react passively after the emergence of contradictions, which also reflects its flexibility and lack of prejudgment in enterprise management. ”

Can the shock of the industrial chain be avoided?

Considering that the global semiconductor supply chain is still fragile and the tight supply of chips will continue for at least 6 months, the shutdown of Samsung's factory will have a negative impact.

At present, Samsung has a complete industrial chain in the fields of panels, semiconductors, mobile phones, etc., and occupies a pivotal position in the supply of the global market in these areas. Samsung is one of the world's largest smartphone manufacturers, and it maintains high output in processors, OLED panels, CMOS image sensors and other aspects of the upstream of the industry chain, which affects mobile phone manufacturers around the world. At the same time, Samsung has been laying out components such as circuit boards, lenses, and resistors for many years, and Samsung SDI's battery business also has a place in the world.

In today's increasingly important and scarce chip, Samsung also holds an important voice in the global semiconductor industry chain. In 2021, Samsung's semiconductor business ranked first in the world in terms of revenue, and many manufacturers around the world are cooperating with it and relying on their chip production capacity. In terms of semiconductor technology, Samsung already has chips comparable to TSMC's advanced processes such as 5nm and 4nm, and has also been involved in memory chips, base station chips, and automotive chips.

Jiang Han said: "Samsung's influence and competitiveness in the semiconductor and panel markets are beyond doubt. In recent years, the main employees of its unions have also come from industries such as semiconductors. For industrial chain enterprises, Samsung is a consumer side is also an important producer of raw materials, if Samsung can not solve the possible strike problem in a short period of time, or even cause production suspension, it will cause chip supply to be more tight, directly causing the industrial chain shock. ”

"At present, the negotiations between Samsung Electronics and the trade union may reach an agreement in a compromise manner, but after the strike appears and a compromise agreement is reached, there is still uncertainty about whether there will be new demands in the future and cause a wider range of labor conflicts, which will have a negative impact on the expectation of stabilizing the supply chain, and Chinese industrial chain manufacturers should respond in advance." Sources close to Samsung Electronics revealed.