The first general strike in Samsung's history entered its third day: thousands of people participated, with the semiconductor sector being the main force

The Paper

2024-07-10 11:08Posted on the official account of Shanghai The Paper

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01Samsung Electronics' first general strike in 55 years has entered its third day, and 6,540 people have already expressed their participation in the strike.

02The union plans to strike indefinitely, asking the company's management to dialogue, increase salary increases, fulfill paid leave commitments, etc.

03Since the semiconductor division is the main force, the strike may affect factory production, but Samsung said that the production line has not been significantly affected.

04However, some analysts believe that the strike may be a reflection of the deterioration of Samsung Electronics' business conditions in recent years.

05 In the first quarter of this year, Samsung Electronics' performance has come out of the trough, with both revenue and profit increasing.

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The first large-scale strike that broke out in the 55-year history of Samsung Electronics, which was called by the Korean media, will enter its third day.

On July 10, Samsung Electronics' largest union, the National Samsung Electronics Union, said on its website that it planned to strike indefinitely. According to foreign media reports, due to "confirming that the company's management has no intention of dialogue", the Samsung labor union announced that it would hold an indefinite strike. The strike began on July 8 and was described by Korean media as the first general strike since the company's establishment.

Yonhap News Agency reported that following the general strike mobilization meeting the day before, the union held a strike "training" for 1,000 members on the 9th, and plans to continue the "training" on the 10th and continue the strike. For its part, the union said that 6,540 people had indicated their participation in the strike. At the previous day's rally, the union estimated 4,000 to 5,000 people to participate, while Samsung and the police estimated 3,000.

According to reports from a number of Korean media on July 9, the Samsung labor union began to hold a strike in front of the main gate of Samsung Electronics' Hwaseong factory in Hwaseong, Gyeonggi Province on the morning of the 8th, which is scheduled to last for 3 days. The Samsung Electronics Labor Union has more than 30,000 members, accounting for about 24% of Samsung's total workforce in Korea.

Previously, the trade union proposed to the management a series of demands such as applying a higher salary increase to all union members, fulfilling the promise of paid leave, improving the standard of excess profit bonuses paid according to the standard of economic added value, and compensating for the loss of wages caused by the strike.

According to previous media reports, the dispute between workers and Samsung mainly revolves around the following two points: the salary increase is too low: the national Samsung Electronics Union believes that the 5.1% increase is too low and demands that the salary increase be increased to 6.5%; Performance-based bonus system: The labor union requested Samsung Electronics to adjust the measurement standard of performance-based bonuses from economic value-added (net operating profit after tax minus capital investment) to the same operating profit as SK hynix and LG Electronics.

Since January this year, the two sides have been negotiating wages, but they have not been able to narrow their differences. Later, under the mediation of the Central Labor Commission of South Korea, it was decided to suspend the negotiations and hold a vote of union members. Eventually, the union was granted the legal right to strike, and on May 29 it announced that it would go on strike, with the aim of "influencing production". If the management does not come up with a solution by the deadline (10 days), the union may go on strike indefinitely.

Samsung said that the current market situation is not conducive to meeting these requirements, the factory has put in replacement personnel the day before, there is no difference in production, and the production line has not been greatly affected on the day. Samsung revealed that the number of employees participating in the strike that day was lower than the previous day.

South Korean media said that employees in the semiconductor department were the main force of the strike. Samsung said that the operation of semiconductor production lines has not been significantly affected, but South Korean media pointed out that even if many production lines are automated, it is difficult to replace the important personnel who operate these production lines. Once a semiconductor production line is shut down, it takes a lot of time and money to resume production.

Some analysts believe that the strike may be a reflection of the deterioration of Samsung Electronics' business conditions in recent years. Industry insiders said that Samsung Electronics failed to respond to market demand in a timely manner in the semiconductor industry and artificial intelligence chips, resulting in a loss in the company's semiconductor business last year. The union pointed out that the root cause of the crisis was the failure of management to make decisions, not the responsibility of employees. In addition to this, Samsung Electronics is also facing a tense situation in labor relations. As more young employees join, they put more demands on the working environment, leisure time and the distribution of benefits.

The strike also reportedly drew opposition from some. Some people believe that the treatment of Samsung Electronics employees is already at a high level in the industry, and the requirements of the union are too harsh. According to reports, the average annual salary of Samsung Electronics employees last year was about 135 million won (about 700,000 yuan), much higher than that of South Korean salarymen, and some even described it as a "strike of the aristocracy".

Since the beginning of this year, as the AI boom has driven the growth of the chip business, Samsung Electronics' performance has come out of the trough and hit a short-term high.

On July 5, Samsung Electronics announced its preliminary performance report, with sales of 74 trillion won (about 390 billion yuan) in the second quarter of 2024, an increase of 23.31% year-on-year; The operating profit was as high as 10.4 trillion won (about 54.8 billion yuan), a sharp increase of nearly 15 times year-on-year.

Samsung Electronics has not only maintained its operating income above 70 trillion won for two consecutive quarters, but also surpassed its single-quarter operating profit of 10.57 trillion won after hitting an operating income of 10.852 trillion won in the third quarter of 2022, even exceeding last year's full-year operating profit of 6.57 trillion won. According to the analysis of industry insiders, the performance of Samsung Electronics rose, mainly benefiting from the wave of artificial intelligence, which promoted the rebound of memory chip prices. In the second quarter of this year, the price of DRAM chips for technology equipment increased by about 13% to 18% from the previous quarter, and the price of NAND flash memory chips used for data storage increased by 15% to 20% from the previous quarter, according to data provider TrendForce.

However, in 2023, due to the decline in memory chip prices and other impacts, Samsung Electronics' revenue and profit will both decline, of which the annual revenue will be 258.94 trillion won, a year-on-year decrease of 14.32%; Operating profit was 6.57 trillion won, down 84.85% year-on-year. This is the first time since 2009 that Samsung Electronics' operating profit has fallen below 10 trillion won, and its annual net profit of 15.49 trillion won is the lowest in 12 years.

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