Samsung cuts wafer input amid strike

Samsung Electronics began cutting new wafer input at some chip lines on May 14 as it prepared for a possible 18-day strike by its largest labor union, according to Reuters and multiple South Korean media reports. The move came a day after government-mediated wage talks in Sejong ended without a deal between management and union negotiators. Samsung also sent a letter urging the union to return to pay talks, while South Korea’s Labour Commission proposed another mediated session on Saturday in an effort to avert a walkout. ### Why is Samsung cutting wafer input before any strike has started? Samsung Electronics started reducing chip production on Thursday ahead of a possible strike, Reuters reported, citing a MoneyToday report and industry sources. South Korean reports said the company entered an emergency management mode for semiconductor operations and limited new wafer input to keep production flow manageable if staffing is disrupted. A Samsung spokesperson declined to comment to Reuters on the production-cut report. (money.usnews.com) Semiconductor lines run around the clock, and South Korean reports said Samsung was trying to avoid defects, wafer spoilage and quality problems that could persist after a stoppage. BusinessKorea and other local outlets said the company’s core precaution was to reduce the number of new wafers entering production before the planned May 21 strike date. ### What exactly broke the wage talks? (money.usnews.com) Government-led mediation ended early on May 13 after nearly 17 hours of talks at the National Labor Relations Commission office in Sejong, according to Korea Herald, citing Yonhap. The dispute centers on performance-based bonuses. Union officials have demanded bonuses equal to 15% of operating profit, removal of the payout cap and formal rules that make the bonus system more transparent. (businesskorea.co.kr) Choi Seung-ho, head of Samsung Electronics’ largest labor union, said after the session that the proposal “only worsened” and that differences had not narrowed. On May 14, Choi told Reuters there was “no reason to continue the dialogue” without “institutionalisation and transparency,” referring to the union’s demand for an overhaul of Samsung’s bonus scheme. ### How large is the threatened strike? (koreaherald.com) The union has planned an 18-day strike from May 21 if its demands are not met, Reuters reported. Korea Herald said 41,000 unionized workers had expressed an intention to participate, and Choi said that figure could rise above 50,000. Earlier Seoul Economic Daily reporting said roughly 40,000 union members gathered at Samsung’s Pyeongtaek campus in April to back the strike plan running from May 21 to June 7. (koreaherald.com) The dispute follows earlier strike action at Samsung and comes at a sensitive time for the company’s memory business. Reuters described Samsung as the world’s largest memory chipmaker, and local reports said most expected participants are in the chipmaking division. ### Why are South Korean officials involved so directly? (money.usnews.com) South Korea’s Labour Commission called on Samsung and the union to hold another round of government-mediated talks on Saturday, Reuters reported. Finance Minister Koo Yun-cheol said on May 14 that a strike should be averted “no matter what,” warning it would pose a significant risk to economic growth, exports and markets. (money.usnews.com) Government data cited by Reuters showed semiconductors accounted for 37% of South Korea’s exports in April, up from 20% a year earlier. That export concentration helps explain why the labor dispute at one company has drawn intervention from labor authorities and public warnings from the finance ministry. (money.usnews.com) ### What should readers watch next? Saturday is the next formal checkpoint. The Labour Commission has asked Samsung Electronics and union negotiators to return for another mediated session, according to Reuters. If no deal is reached, the union’s announced strike window starts on May 21 and runs through June 7. (money.usnews.com)