Samsung Electronics and its labour union have entered critical last-minute negotiations to prevent the largest strike in the tech giant’s history.
A potential walkout by over 45,000 workers threatens to severely impact South Korea‘s economy and global supply chains.
This looming 18-day industrial action, set to begin on Thursday, coincides with a severe global shortage of memory chips – vital for AI data centres, smartphones, and laptops.
This scarcity has recently driven significant profit surges for Samsung and its competitors.
The current discussions follow the breakdown last week of initial government-mediated talks concerning pay and bonuses.
Samsung, the world’s largest memory chipmaker, is a cornerstone of the South Korean economy, responsible for nearly a quarter of the nation’s exports.
Further complicating matters for the union, a South Korean court has partially approved Samsung’s injunction request, mandating that any strike must not impede production.
A court spokesperson clarified that this ruling prohibits the degradation of production materials and requires safety and product damage prevention operations to continue at normal levels.
Non-compliance could result in daily fines of 100 million won ($72,000) for each of the two main unions, with individual union leaders facing penalties of 10 million wonper day, according to the spokesperson.
The union said in a statement the court ruling would not dissuade it from pursuing a strike if talks did not achieve a deal, but pledged to engage seriously in negotiations.
Samsung Electronics declined to comment.
Samsung Electronics shares rose as much as 6.7 per cent in morning trade after the court’s ruling, outstripping a 1.4 per cent rise in the benchmark KOSPI index.
South Korean government officials have increasingly voiced worries about a strike, warning it could pose significant risk to economic growth, exports and financial markets.
President Lee Jae Myung, who is a former rights lawyer and is seen as leading a union-friendly government, said in a social media post on Monday that management rights should be respected as much as labour rights.
“In South Korea, which has adopted a liberal democratic order and capitalist market economy, labour should be respected as much as businesses, and corporate management rights should be respected as much as labour rights,” Lee wrote on X.
He said that workers should receive fair compensation for their labour, while shareholders who bear risks and losses through investments also deserve a share of corporate profit.
South Korean Prime Minister Kim Min-seok said on Sunday the government would pursue all options, including emergency arbitration, to prevent a strike.
An emergency arbitration order, which can be invoked by the labour minister if it is deemed that a dispute is likely to harm the economy or daily life, immediately prohibits industrial action for 30 days while the National Labour Relations Commission conducts mediation and arbitration.
The union has said it would not give in to pressure on arbitration and would not agree to a pay deal should the company offer a less favourable proposal.
After the collapse of negotiations last week, executives from Samsung’s chip division urged the union to refrain from striking, citing concerns raised by hard-won semiconductor customers such as Nvidia, according to media reports.
The executives said some customers had indicated they might temporarily stop accepting shipments during a strike because they could not guarantee product quality, according to the reports, citing a participant at the meeting.
Samsung declined to comment on the matter.
The government-mediated negotiations between the union and the company are due to continue until Tuesday, media reported.
