At Samsung, the global AI boom has sparked an imminent strike and serious divisions

Source: Global Market Briefing

The upcoming 18-day strike at South Korea's chip giant Samsung has sparked government concerns, shaken foreign investor confidence, and threatened the global supply chain. The core issue lies in: who should share in the profits brought by the AI boom?

More than 45,000 employees are threatening to launch the largest strike in the group's history starting May 21, which would lead to a drop in production of memory chips, key components in AI data centers, smartphones, and laptops. Samsung and its labor union are struggling to reach a compromise over bonuses.

Samsung Electronics has earned massive profits from the global memory shortage and has proposed generous bonuses for employees. However, the company plans to give bonuses to 27,000 memory chip workers that are at least six times higher than those for employees in its logic chip design and manufacturing divisions.

The union believes that the remaining 23,000 employees—who are responsible for producing AI chips for Tesla and Nvidia, and often work in the same buildings as their colleagues in the memory division—should not be left out. Although the foundry business has struggled in recent years, leading to company losses of billions, these employees should not be sidelined.

The media has reviewed hundreds of pages of Samsung’s internal salary negotiation records and interviewed more than a dozen employees, including union leaders and sources close to the negotiations.

They spoke of deep divisions within the company, described employee departures, and revealed how these issues are related to Samsung's unique goal—to become the world’s only semiconductor company offering “one-stop” solutions across all types of chips and services, which stands in stark contrast to more specialized competitors like Micron or TSMC.

These internal discussions revealing friction between company divisions and employee turnover have not been previously reported. JPMorgan estimates that the strike could reduce Samsung's operating profit by 21 trillion to 31 trillion won (approximately $14.08 billion to $20.79 billion), with sales losses possibly reaching around 4.5 trillion won.