A dispute over semiconductor workers’ bonuses in Korea could upend global technology supply chains and weigh on South Korea’s economy, as Samsung’s (016360.KS) labor union has threatened to go on strike on May 21 for 18 days.
On Sunday, Samsung and the union agreed to extend negotiations after the first round of government-mediated talks failed and a South Korean court granted a partial injunction that could compel workers to show up amid a strike, according to Reuters.
Relations between the world’s largest memory chip manufacturer and its workers broke down over how bonuses are allocated. Samsung is expected to bring in $200 billion in operating profits this year amid booming chip demand, and employees are seeking a 15% share of those profits.
At stake, should the strike move forward, is 22.8% of South Korea’s exports, which come from Samsung, as well as broader economic fallout across industries that rely on memory chips, including artificial intelligence, gaming, and consumer electronics like laptops. Already, companies are dealing with supply bottlenecks for memory and storage as AI data centers scoop up these components to try to meet booming demand.
“Just one day of suspension at Samsung Electronics’ semiconductor factory is expected to incur direct losses of as much as 1 trillion won [$667.68 million],” South Korea’s Prime Minister Kim Min-seok said on Sunday, per Reuters.
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