Samsung is heading toward a strike that could impact global chip supplies and smartphones

Management and union leaders at Samsung Electronics failed to reach a last-minute deal over wages Wednesday, raising prospects for a strike at the South Korean electronics giant that could rattle global semiconductor supplies and the country’s trade-dependent economy.

Government officials have threatened to invoke rarely used emergency powers to force a settlement at Samsung, where the union, which represents more than 70,000 workers, says the company has failed to offer adequate compensation despite its soaring profits fueled by the global boom in artificial intelligence.

After the latest round of talks ended without a breakthrough on Wednesday, union leader Choi Seung-ho told reporters that unionized workers will begin an 18-day strike from Thursday.

Both the union and the management held each other responsible for a failure to reach a deal. Choi accused management of refusing to accept a government-mediated proposal whose details he refused to disclose. The management accused the union of calling for excessive compensation packages for workers at loss-making units.

The two sides said they will continue efforts to reach a deal. The two sides met again Wednesday afternoon at the arrangement of Labor Minister Kim Younghoon, according to Kim’s ministry.

Samsung and its cross-town rival, SK Hynix, together produce about two-thirds of the world’s memory chips, which are seeing surging demand driven by AI. Samsung said last month its operating profit for the January-March quarter jumped eightfold to a record 57.2 trillion won ($38 billion).

Union leaders have demanded a compensation structure in which Samsung would commit to spend 15% of its annual operating profit on employee bonuses and scrap bonus caps, which are currently set at 50% of annual salaries. The company says the demands are excessive, citing the highly cyclical nature of the semiconductor business.

Prime Minister Kim Min-seok, the government’s No. 2 official after President Lee Jae Myung, said in a televised statement Sunday that the strike could cause up to 100 trillion won ($66 billion) in economic damage by disrupting Samsung’s highly complex semiconductor manufacturing processes.

The planned strike also has a potential global impact. Given that supply in the global memory semiconductor market is struggling to keep up with demand, the Samsung strike was expected to further drive up prices and push back AI infrastructure investments in other countries, said Lee Jun, an expert at the Korea Institute for Industrial Economics and Trade.

The strike was expected to hurt operations of Samsung’s production of smartphones and other consumer electronics as well, observers say.

A local court on Monday partially granted the company’s request for an injunction against the planned strike, ruling that the union must maintain certain staffing levels to prevent damage to facilities and materials and ensure safe operations. The Suwon District Court also barred unionists from occupying key facilities and offices.

—Kim Tong-Hyung and Hyung-Jin Kim, Associated Press

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