Samsung Electronics' semiconductor division is facing an unprecedented risk of shutdown. As the last-minute negotiations broke down again, the union decided to launch an 18-day general strike as planned on May 21, local time, putting this key industrial chain node into a state of high uncertainty.
According to the latest reports from South Korea, temporary negotiations between Samsung's labor union and management have failed, clearing procedural obstacles for a general strike originally scheduled to start on May 21 and last until June 7. Despite this, the union still stated that even during the strike, it "will not stop trying to reach a settlement."
The core of this labor conflict is the union's demand for a bonus of 15% of the company's annual operating profit, amounting to approximately US$30 billion, which was rejected by management. In this context, the union chose to use high-intensity strikes to exert pressure, hoping to leverage the highly sensitive nature of Samsung's semiconductor production system to leverage bargaining chips.
Although the semiconductor division is currently highly automated, once there is a large-scale vacancy of peripheral supporting and supporting positions, it may still affect the overall production rhythm. According to an assessment by South Korean brokerage KB Securities, if only 30% to 40% of union members participate in the strike, the global supply chain may still suffer an impact: DRAM supply may decrease by 3% to 4%, and NAND flash memory may decline by 2% to 3%. This expectation is particularly worrying because global DRAM inventories are already low and can only meet demand for about 4 to 6 weeks.
While the game between labor and capital is escalating, South Korea's judicial and administrative intervention has also failed to work. Earlier this week, a South Korean court issued an injunction prohibiting all actions that would interfere with Samsung's normal business operations and threatened to impose daily fines of 100 million won (approximately $66,500) on union members who do not comply with the injunction. In addition, the South Korean government also issued a "hard strike" signal this week, threatening to use the legally binding "emergency arbitration power" that can suspend the strike within a maximum period of 30 days. However, it seems that it has not succeeded in forcing the two sides to reach a compromise.
With the breakdown of negotiations and the failure of judicial high-pressure and administrative mediation, the upcoming strike by Samsung's labor union is bound to cause further disruption to the global memory chip and consumer electronics markets. At a time when tight supply of DRAM and NAND has become the norm, upward price pressure and supply instability may become an unavoidable theme in the relevant industry chains in the short term.