Workers at Samsung Electronics in South Korea announced Friday they will proceed with a planned work stoppage next week, despite the tech giant’s latest attempt to restart salary negotiations without preconditions. The news sent the company’s stock tumbling by as much as 5.9%.
Talks between the labor group and Samsung over compensation and bonus structures fell apart this week with government mediators involved, raising the stakes for a potential strike at the globe’s largest memory chip manufacturer.
Union representatives said Friday they would consider new discussions after June 7, but are moving ahead with their 18-day work stoppage beginning May 21 that threatens to interrupt chip manufacturing operations.
Market experts blamed the stock drop on mounting worries about how a strike might affect production capabilities and Samsung’s capacity to fulfill customer orders.
“There appears to be rising concerns over delivery reliability if the strike takes place and sentiment that rivals could benefit from the uncertainty,” said Ryu Young-ho, a senior analyst at NH Investment & Securities.
The likelihood of a work stoppage seemed to be growing since Samsung had not appeared to offer new proposals to workers, according to Ryu.
Samsung Electronics acknowledged in a public statement that it had proposed talks without conditions, but declined to elaborate further.
South Korea’s Labour Commission has urged both parties to participate in another government-facilitated negotiation session Saturday to prevent the strike from occurring.
The labor organization had previously stated it would only participate in discussions if Samsung presented a comprehensive proposal meeting worker demands by 0100 GMT Friday.
Frustrated by what they describe as a significant disparity in bonus compensation compared to competing chipmaker SK Hynix, union leaders have warned that more than 50,000 employees could leave their positions next week.
High-ranking South Korean officials, including the prime minister and finance minister, have expressed alarm that a Samsung work stoppage must be prevented, cautioning it could create substantial threats to economic expansion, export revenues and financial markets.
South Korean Industry Minister Kim Jung-kwan stated Thursday that a strike would inflict permanent economic harm and that emergency intervention might become necessary.
According to South Korean regulations, only the labour minister possesses emergency arbitration authority. Labour Minister Kim Young-hoon has emphasized the importance of continued dialogue between Samsung and its workers.
Investment bank JPMorgan released analysis suggesting the production consequences of a strike could exceed earlier projections, based on the union’s expectations of widespread worker participation.
JPMorgan calculated potential damage to Samsung’s operating profits at 21 trillion won to 31 trillion won ($14.08 billion to $20.79 billion), with sales losses potentially reaching approximately 4.5 trillion won.
Samsung Electronics stock was down 5.2% at 0305 GMT, while the benchmark KOSPI index fell 3.4%.
