Key Takeaways
- Production at Samsung’s facilities plunged during worker protests, with foundry output down 58% and memory chips down 18% during one overnight shift
- Workers are calling for performance bonuses equivalent to 15% of operating profit with no upper limit
- Union leadership has announced plans for a general strike spanning May 21 through June 7 unless demands are met
- Analysts project that an 18-day work stoppage could reduce worldwide DRAM availability by 3-4% and NAND supply by 2-3%
- Shares of Samsung Electronics dropped 2.23% to close at 219,500 won; the KOSPI index was nearly unchanged
Labor tensions at Samsung Electronics are escalating rapidly, sending ripples through global semiconductor markets.
Approximately 40,000 union members gathered near the company’s Pyeongtaek manufacturing complex on April 23, choosing to skip their scheduled overnight shift that ran from Thursday evening at 10 p.m. through Friday morning at 6 a.m. The impact was immediate and significant: foundry chip manufacturing plummeted by 58%, while memory chip production declined 18% during that single shift period.
Samsung has chosen not to issue a statement on the matter.
The labor organization — which only recently achieved majority union representation for the first time in the company’s history — is pushing for compensation changes that would allocate 15% of operating profit directly to workers as performance-based bonuses. Additionally, they’re demanding complete elimination of the current cap on bonus payments.
Union leadership has set a clear deadline: without a negotiated settlement, members will launch a comprehensive general strike beginning May 21 and continuing through June 7.
Potential Supply Chain Consequences
Industry analysts are closely monitoring the situation. In a research note, KB Investment & Securities research director Kim Dong-won indicated that the threatened work stoppage “will serve as a key variable that deepens supply shortages” considering the already constrained memory chip market environment.
Samsung commands a dominant 36% share of the global DRAM market and controls 32% of NAND flash production. Extended labor disruptions at the company’s Pyeongtaek and Hwaseong manufacturing sites could cut worldwide DRAM availability by 3-4% and reduce NAND supply by 2-3%, based on Kim’s projections.
Beyond the strike period itself, Kim forecasts that resuming normal operations could require an additional two to three weeks to fully restart and stabilize the highly automated manufacturing systems.
The scale of participation will be crucial. During a July 2024 labor action, participation reached only about 15% of union membership, which minimized market impact. For the upcoming potential strike, industry observers anticipate between 30,000 and 40,000 members — representing approximately 30-40% of the total union — could participate in the work stoppage.
Investor Concerns Mount
The union’s demands haven’t received universal support. Fulfilling the proposed wage and bonus structure would require distributing roughly 45 trillion won ($32 billion) in bonus compensation, sparking worries that such expenditures could limit capital available for facility expansion and research and development initiatives.
Representatives from the Korea Shareholders’ Movement Headquarters organized a counter-demonstration near the union gathering location, contending that meeting these demands could significantly erode shareholder value during what should be a profitable period for the semiconductor industry.
Despite these concerns, the prevailing view among market analysts suggests that earnings projections will likely remain stable even if a strike materializes. An analyst from a prominent securities firm, speaking anonymously, noted that the primary concerns center on investor psychology and temporary supply-demand imbalances rather than fundamental long-term profitability.
“Unless the strike is prolonged or involves radical actions such as damage to production facilities, it has not had a fatal impact,” the analyst said.
Samsung Electronics shares finished trading at 219,500 won on April 24, representing a 2.23% decline for the session. The broader KOSPI index settled at 6,475.63, slipping just 0.18 points.
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