Samsung Electronics has entered an emergency management situation a week before the labor union strike.
According to the industry on the 14th, Samsung Electronics moved into an emergency management system and began preparing countermeasures out of concern that the union strike could cause large-scale production disruptions and quality issues. Because of the nature of the semiconductor business, production volume and quality control must begin before a strike to minimize damage.
A semiconductor industry official familiar with internal affairs at Samsung Electronics said, "To manage quality, there likely was a need to adjust production volumes before the strike," adding, "If quality issues arise, the structure is such that various problems, including disruptions to the global supply chain, can occur, so they moved to respond early."
In the industry, there are estimates that the losses from Samsung Electronics entering an emergency management situation alone could reach at least 10 trillion to 20 trillion won. Even if the court fully grants the injunction Samsung Electronics filed against the union to prohibit "illegal industrial action," preventing the strike from proceeding, the likelihood of large-scale losses has already increased.
The Suwon District Court, which held the second hearing date the previous day on the injunction application to prohibit illegal industrial action, plans to issue a ruling by the 20th of this month at the latest, a day before the union's general strike begins. Some suggest that if Samsung Electronics' manufacturing process is completely halted by the strike, direct and indirect losses could reach 100 trillion won.
The Samsung Electronics union is sticking to its position of pressing ahead with an 18-day general strike starting on the 21st. The number of applicants to join the strike is reportedly about 43,300. In a recent report, Kim Dong-Won, head of research at KB Securities, analyzed, "Assuming the worst-case scenario in which the strike lasts 18 days, it is highly likely that it will take an additional two to three weeks to restart and normalize automated lines even after it ends."
Demand for high-bandwidth memory (HBM) and high-performance DRAM is currently surging due to artificial intelligence (AI) infrastructure investments by big tech such as Nvidia, AMD, Google and Meta. Accordingly, there is also analysis that a temporary contraction in global memory supply due to Samsung Electronics' 18-day general strike could give Chinese corporations a windfall. The view is that CXMT and YMTC could fill the gap left by Samsung Electronics.
In the business community, voices are growing that the government should move to emergency mediation to prevent the worst-case scenario, given the massive damage expected from the Samsung Electronics strike. The emergency adjustment authority is a system based on Article 76 of the Trade Union and Labor Relations Adjustment Act, an exceptional mediation procedure that the Minister of Employment and Labor (MOEL) can invoke when industrial action threatens daily life or is likely to significantly harm the economy. Once invoked, industrial action is banned for 30 days, and the National Labor Relations Commission's mediation and arbitration procedures proceed. If no agreement is reached during this period, referral to arbitration is decided by the Chairperson of the National Labor Relations Commission ex officio.
The emergency adjustment authority was invoked in the 1969 Daehan Shipbuilding strike, the 1993 Hyundai Motor strike, and the July and December 2005 Asiana Airlines and Korean Air Lines pilots' strikes. An industry official said, "In the past, the emergency adjustment authority was invoked after a strike began, but in Samsung Electronics' case, given the characteristics of semiconductors, there is a need to quickly remove uncertainty before the strike."