Samsung Electronics, union hold last-ditch talks to avert strike threatening global supply chains

Seoul: Samsung Electronics and its ⁠labour union started talks on Monday in a last-ditch bid to avert the biggest strike in the tech giant's history, amid concern that ⁠a walkout by more than 45,000 workers could hit South Korea's economy and disrupt global supply chains.

The ‌threatened 18-day strike starting on Thursday comes amid an ​acute global shortage in memory chips, which are essential components in AI data centres, smartphones and laptops. The shortage has fueled soaring profits at Samsung and its peers in recent months.

Monday's talks follow the collapse last week of a first round of government-mediated negotiations over pay and bonuses at the world's largest memory chipmaker, which accounts for nearly a quarter of South Korea's exports.

Adding to pressure on the union, a ​South Korean court partially granted Samsung's request for ⁠an injunction, ordering the union to ensure any strike did not disrupt production.

The ruling means that a strike must not lead to the degradation of materials used in production, while operations related to safety and avoiding product damage must be maintained at normal levels, a court spokesperson said by telephone.

The two main unions could face fines of 100 million won ($72,000) ⁠per day each if ‌they failed to comply, while union leaders could be fined 10 million won per day, the spokesperson said.

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.

Shares bouyed by court ruling

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.

Chips feeding AI boom

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 Labor 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.