Samsung Workers Strike, the First in the Company’s History

For the first time, workers at Samsung, the conglomerate that dominates the South Korean economy, went on strike on Friday.

The action comes as Samsung Electronics fights to regain its edge in the business of making memory chips, a critical component in the advanced artificial intelligence systems that are reshaping longstanding rivalries among global technology companies.

Workers in Samsung’s chip division were expected to make up the majority of those who will not report to work on Friday for a planned one-day strike. Union representatives said that multiple rounds of negotiations over wage increases and bonuses had broken down.

“The company doesn’t value the union as a negotiating partner,” said Lee Hyun Kuk, the vice president of the Nationwide Samsung Electronics Union, the largest among five labor groups at the company. It says that it represents 28,000 members, about one-fifth of Samsung’s global work force, and that nearly 75 percent voted in favor of a strike in April.

Mr. Lee said that union workers received no bonuses last year, while some had gotten bonuses of as much as 30 percent of their salaries in the past. “It feels like we’ve taken a 30 percent pay cut,” he said. The average union worker earned about 80 million won last year, or around $60,000, before incentives, he said.

A Samsung Electronics representative said the company was trying to reach an agreement with the union but declined to comment further on the details of the negotiations.

The work stoppage had not affected Samsung’s production or business activities, the company representative said. It was timed to fall between a national holiday and the weekend, on a day that many people in South Korea planned to take as vacation. It was not clear how many workers participated in the action. A small group of workers gathered in front of Samsung’s headquarters in Seoul on Friday morning while organizers played protest songs over loudspeakers.

Still, it was awkward timing for the company, which has been trying to reassure clients and investors that its chip business can meet the demands of the artificial intelligence boom.

“Samsung has been a highly respected company in the memory semiconductor sector, they’ve been the leader for decades. But they lost the technology leadership to competitors,” said Nam Hyung Kim, an analyst at the equity research firm Arete Research. “The union strike is nothing compared to a lot of the issues they are facing at this point,” Mr. Kim said.

While so-called logic chips make computers run, memory chips let them store information. They are in everything from smartphones to refrigerators. Advanced computers use many of both types of chips, and generative artificial intelligence systems rely on extra-strength, high-bandwidth memory chips to create text, images and other kinds of content on demand.

Samsung has been the world’s largest maker of memory chips for years, and reported about $1.4 billion in profit from its chip division in the first quarter of this year.

But that followed four straight quarters of losses. Samsung ended last year with its weakest earnings in more than a decade.

Despite the losses, Samsung remained the world’s biggest memory chip maker by revenue and market share last year, according to TrendForce, a market research firm. But heading into the year, its local rival, SK Hynix, claimed the top spot in the market for the next-generation, high-bandwidth memory chips just as demand for them took off. Companies developing artificial intelligence systems like Nvidia scrambled to buy them. Analysts say that SK Hynix anticipated this demand earlier than Samsung did. Samsung’s foundry business, which makes chips designed by other companies, also lags behind rivals.

The result was the largest shortfall in the company’s history, according to remarks Jun Young-hyun made to his colleagues when he took over the leadership of Samsung’s chip division last month after an executive shake-up.

Mr. Jun previously led Samsung’s chip business when it overtook Intel as the world’s largest chip maker by revenue. And he ran its battery arm after the company discontinued a line of smartphones after several had spontaneously exploded.

A representative from Samsung said the company expected to increase its output of high-bandwidth memory products threefold over last year, and to double that again in 2025. The company said that it planned to invest about $200 billion by 2042 in a new semiconductor industrial complex south of Seoul that was being developed by the government, and that it planned to spend $40 billion on facilities in Texas.

This time, Mr. Jun’s…