Samsung Electronics grapples with labor dispute, semiconductor setbacks

Samsung Electronics Co. is grappling with internal and external challenges at a critical time when it should be focusing on enhancing its competitiveness in the key semiconductor business amid a rapidly changing business environment. Earlier this week, the National Samsung Electronics Union (NSEU) announced plans to go on a strike in protest against stalled wage negotiations with the management. Although the union has not yet gone on strike, this announcement made headlines, as Samsung Electronics has not had a strike since its founding in 1969. The NSEU is the biggest labor union in Samsung Electronics with nearly 28,000 members, accounting for 22 percent of the company's 125,000 employees. Unionized workers of Samsung Electronics Co. hold a press conference in front of the company's office in southern Seoul on May 29, 2024. (Yonhap) This intensifying management-labor dispute coincides with rising concerns over Samsung Electronics' struggles in the semiconductor sector. Last year, Samsung Electronics, the world's largest chipmaker, posted an annual loss of 15 trillion won (US$11 billion) from its semiconductor business alone due to declining demand for IT products. It swung to the black in the first quarter of this year with an operating profit of 1.91 trillion won, ending a five-quarter losing streak. However, significant challenges remain. This photo provided by Samsung Electronics Co. shows its facilities in Hwaseong, some 45 kilometers south of Seoul. (PHOTO NOT FOR SALE) (Yonhap) In the high bandwidth memory (HBM) chips market, a crucial segment in the expanding AI sector, Samsung Electronics lost the leadership to its chipmaking rival SK hynix Inc. Its foundry business, or contract chipmaking, remains a distant runner-up to industry leader Taiwan Semiconductor Manufacturing Co. (TSMC). Earlier this month, Samsung Electronics abruptly replaced the head of its semiconductor business as shock therapy in an apparent move to address these issues. Compounding these challenges, accidents have occurre d in the company's operations. On Monday, two workers on the chip production line at Samsung Electronics' Giheung Campus in Yongin, 42 kilometers south of Seoul, experienced X-ray exposure to their hands. Last week, a subcontractor worker died at the construction site of a new day care center on the Giheung Campus. In this context, Jun Young-hyun, the new head of Samsung's semiconductor division, has come into the spotlight. Jun, who has extensive experience in the semiconductor and battery sectors, said he acknowledged the challenges the company faces and expressed his commitment to restoring its reputation as the world's leading semiconductor company. "As an executive, I feel a heavy responsibility for the current situation," he said. "I will analyze the circumstances with renewed determination and find ways to overcome these difficulties." Source: Yonhap News Agency