SEOUL, May 13 (Reuters) - Samsung Electronics and its South Korean labor union failed to reach a pay deal on Wednesday, its union leader said, expecting over 50,000 workers would go ahead with a full strike that threatens to disrupt production of AI and other chips.
The impasse followed hours of marathon talks on Monday and Tuesday under a government-mediated process, as pressure from the public and the government mounted on Samsung workers to compromise on the pay deal and avert a strike.
“I would like to express some regret that none of the agenda items requested by the union have been addressed," union representative Choi Seung-ho told reporters at about 3 a.m. local time on Wednesday.
He said the company did not address union demands to overhaul the pay scheme, including scrapping a cap on bonus pay currently set at 50% of annual base salary, and calculating it solely based on operating profit.
The union has said that should its demands not be met, workers will strike for 18 days from May 21. That could delay shipments to customers, push up chip prices further and benefit rivals.
The union representative said he currently has no plans to resume talks with management before the strike date, but would be willing to consider “a proper proposal” if the company presents one.
The National Labor Relations Commission said it presented "various alternatives" but it decided to conclude the process "due to the wide gap between the two sides’ positions and the union’s request to suspend the talks."
Samsung was not immediately available for comment.
Samsung workers have been angered by what they call a massive gap in bonus pay with rival SK Hynix, which beat Samsung in delivering high-bandwidth memory for artificial intelligence chip units to Nvidia following the release of ChatGPT in late 2022.
SK Hynix last year abolished its pay cap, resulting in bonuses more than three times higher than those offered to Samsung workers, sparking a surge in Samsung union membership.
Employees' frustration has been exacerbated by Samsung's record profits as the AI boom drives up demand for chips.
Last week, Samsung became only the second Asian company after TSMC to have a market capitalisation of more than $1 trillion.
Samsung's chairman of the board, Shin Je-yoon, warned that a strike could hurt investors, employees and have serious consequences for the Korean economy. He added he was "worried about losing market leadership amid fleeing customers and falling competitiveness" if strikes disrupted production.
(Reporting by Hyunjoo Jin in SeoulEditing by Matthew Lewis and David Gregorio)
