[Chip Talk] The 'Union' Variable Hidden Behind Semiconductor Subsidies... Is Samsung Electronics Safe?

Ahead of US November Election, Biden's Pro-Union Moves
March Subsidy Announcement Pressures Intel to "Cooperate with Unions"
US Unions Say "Intel's Response Cold... Negotiating with Micron"

"Intel has committed to working closely with workforce training providers (educational institutions, state and local agencies, labor unions, etc.) to develop and train workers hired for jobs created by the investment announced today under a prior agreement with the U.S. Department of Commerce. Both the Ohio and Arizona construction sites have unionized construction workers. The administration strongly supports workers' rights to unionize. We expect Intel to continue its long-standing tradition of creating good jobs and respecting workers' rights, including not hiring anti-union consultants."

US President Joe Biden delivering a speech at the Intel factory construction site in Arizona last March
[Photo by Reuters]

The Biden administration included this statement in its March 20 announcement of a massive $20 billion (approximately 26.8 trillion KRW) subsidy and loan package to domestic semiconductor company Intel. Immediately after the White House announcement, the Communications Workers of America (CWA), representing U.S. tech and media workers, issued a statement demanding that "Intel sign a binding agreement to ensure that federal subsidies under the CHIPS Act create good jobs." This was pressure for Intel to reach an agreement with CWA allowing employees to freely engage in union activities.

Bloomberg recently reported that "semiconductor factories have become the next target of U.S. unions following electric vehicle plants," noting that Intel has responded coldly to CWA's demands. CWA Chairperson Cloud Cummings stated, "Unfortunately, initial discussions with Intel have not gone well." She added, "(Another U.S. semiconductor company) Micron is my hope and aspiration for reaching an agreement," and "I believe this will open the door for other semiconductor companies to engage with us."

US President Joe Biden (far left), Micron CEO Sanjay Mehrotra, New York Governor Kathy Hochul, and Senate Majority Leader Chuck Schumer of the US Democratic Party are seen talking at the construction site of the Micron factory in Syracuse, New York, last April.
[Image source=AP News]
Photo by AP

The Micron mentioned by Chairperson Cummings has been negotiating with CWA since last month. These negotiations began after Micron received $6.1 billion in subsidies from the Biden administration in April. On the day the subsidy was announced, President Biden visited the construction site and said, "I am pleased that Micron and the union have scheduled negotiations to discuss labor peace." Senate Majority Leader Chuck Schumer, who was present, also said, "Micron is one of the few major companies leading the way by agreeing to discuss workers' futures with the union."

Micron had already reached an agreement with the union representing construction workers last December for its factory construction. Based on this, Micron announced it would hire 3,700 construction workers from union members. At that time, Manish Mattia, Micron's Senior Vice President of Global Operations, stated that the company is cooperating with the union to secure a prepared workforce, differentiating itself from other semiconductor companies.

Micron plans to invest up to $100 billion over the next 20 years to build four semiconductor factories in New York alone. This is expected to create 9,000 new jobs locally. If an agreement is reached between CWA and Micron, CWA will refrain from picketing, striking, or otherwise disrupting Micron until the factory opens in 2028, and Micron will not interfere with CWA's union formation and activities.

U.S. Unions Expand Influence through CHIPS Act... Companies Face Challenges

CWA is making efforts to expand union influence in semiconductor factories leveraging the government's CHIPS Act. Since the government controls subsidy approval and can revoke subsidies if contract terms are violated, Chairperson Cummings explained that this bargaining power allows them to pressure global companies receiving government subsidies.

Some companies have used unions to secure subsidies. In November last year, California-based semiconductor company Akashi Systems announced it would hire only union members. This was at a time when the company had applied for government subsidies. Felix Dejeckam, co-founder and CEO of the company, candidly said, "Historically, the semiconductor industry has not paid attention to unions," and "We know the Biden administration is interested in unions here and we definitely want to meet those expectations." Bloomberg also described this move as "a rare development in an industry historically opposed to unions."

From the perspective of semiconductor companies, the Biden administration's and unions' active cooperation inevitably becomes a burden. The semiconductor industry is highly sensitive to union activities. Given the industry's nature of operating factories 24/7 year-round, large-scale strikes, which sometimes occur in the U.S., can force the disposal of wafers on production lines, causing significant damage.

In this context, TSMC founder C.C. Chang, who has publicly expressed anti-union views, said at a forum held in Taiwan last year, "It was somewhat painful to hear about unions from President Biden." This referred to President Biden's remarks at TSMC's Arizona plant groundbreaking ceremony in 2022, where he praised unionized workers as "the best in the world" and stated, "TSMC's second U.S. plant will also be built with the power of unions."

In December 2022, Zhang Zhongmou, the founder of TSMC, is speaking at the construction site of the Phoenix factory in Arizona, USA. [Image source=AP Yonhap News]

However, even TSMC, whose founder strongly opposes unions, cannot be free from the U.S.'s pro-union stance. TSMC faced difficulties recruiting skilled workers at its Arizona construction site last year. The Arizona labor community, opposing TSMC's workforce policies, submitted petitions to state and local governments urging rejection of TSMC's visa requests, slowing construction progress. Ultimately, in December last year, TSMC reached an agreement with the local union representing construction workers in Phoenix, Arizona, establishing accords on workforce training, worker safety, and the use of foreign workers.

Korean companies such as Samsung Electronics are also under the influence of the Biden administration's pro-union policies. Samsung Electronics is building a semiconductor fab in Taylor, Texas. The U.S. government plans to provide Samsung Electronics with $6.4 billion (approximately 8.9 trillion KRW) in subsidies. SK Hynix is investing $3.87 billion (approximately 5.2 trillion KRW) to build an advanced packaging production base for AI memory in Indiana, U.S., and will collaborate with local research institutions such as Purdue University on semiconductor research and development.