Samsung grapples with labour dispute, semiconductor setbacks

SEOUL: Samsung 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, reports Yonhap news agency.

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 per cent of the company's 125,000 employees.

This intensifying management-labour dispute coincides with rising concerns over Samsung Electronics' struggles in the semiconductor sector.

Last year, Samsung, the world's largest chipmaker, posted an annual loss of 15 trillion won ($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, said 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 occurred in the company's operations.

On Monday, two workers on the chip production line at Samsung Electronics' Giheung Campus in Yongin, 42 km 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 centre 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."