Samsung Electronics is preparing for an upcoming large-scale worker strike and has begun to gradually reduce factory utilization rates and shut down some chip production lines. According to Korean media reports, the company is slowing down the pace of wafer production and shifting into the so-called "emergency operating mode", which essentially means compressing production capacity and reducing new wafers entering the production process. Currently, about 43,286 factory workers have joined the strike, accounting for more than half of the total number of employees in its semiconductor business group (DS division). The staff gap is directly dragging down the operation of the production line.
Under "emergency mode", Samsung will strictly control the entry of new wafers into production. Each process itself is a long-term process that requires round-the-clock operation. Thanks to a high degree of automation, even if there is a shortage of manpower, some production lines can still maintain a minimum level of operation, but key equipment is still inseparable from manual operation and maintenance. As the strike approaches, more production lines will be forced to shut down due to a lack of front-line operators, and overall output is expected to decline significantly.
Market research agency TrendForce estimates that this incident may disrupt about 3% to 4% of the global DRAM supply and about 3% of the NAND flash memory supply. At a time when the supply of DRAM and NAND is tight and shortages are intensifying, Samsung's production cuts and suspensions will further intensify the pressure on the global storage supply chain. The production lines affected this time include key products such as HBM, high and low power DDR5 (LPDDR5) and some customized logic chips. Once the supply outlook becomes uncertain, downstream customers may turn to competitors such as SK Hynix or Micron to diversify risks.
With more than half of its workers absent, Samsung's existing on-site personnel are unable to support high-load production, and chip shipments are believed to be significantly reduced. The strike is expected to officially start on May 21. There will be a production capacity reduction period for about a week before then, and the output level will enter the downward channel in advance. The strike is expected to last 18 days, and it will take an additional two to three weeks for production lines to return to full capacity after the strike ends, which means Samsung's high-capacity manufacturing is at risk for about six weeks.
In the most pessimistic scenario, estimates from all parties show that the total direct revenue loss caused by this incident to Samsung and its customers may be as high as approximately 100 trillion won, equivalent to approximately US$67 billion. In a context where the storage price increase cycle has not yet completely ended and industry inventories are still at relatively low levels, this round of production cuts caused by labor disputes may become an important variable in further escalating tensions in the global storage supply chain.