"Customers Could Be Lost"... Samsung Electronics General Strike 'D-6', Emergency Arbitration in Focus

Samsung Effectively Enters Emergency Management Mode

Big Tech Clients Check 'Supply Stability' Weekly

Concerns Over Order Gains for Rivals Like Micron

Management: "Direct Talks" vs. Union: "Strike Will Proceed"

Experts: "Urgent Need for Government to Invoke Emergency Arbitration"

With only a week remaining until the date announced for the general strike by the Samsung Electronics labor union, the company has entered an emergency management system. As even major global Big Tech clients are closely monitoring the possibility of supply disruptions, concerns are growing that if the strike becomes a reality, it could result in competitive advantages for rival companies and the loss of customers. Although management has made an official proposal for direct talks, signaling a final willingness to negotiate, the union is maintaining a hardline stance, and voices within and outside the industry are increasingly calling for the government to invoke its emergency arbitration powers.

According to industry sources on May 15, Samsung Electronics reportedly entered an emergency management situation in preparation for the general strike starting the previous day. At the DRAM production line of the Samsung Electronics Pyeongtaek Campus, about 15,000 wafer containers (FOUPs) are being removed from dedicated logistics equipment in a process known as CON-OUT. This is equivalent to 360,000 wafers. This is interpreted as a preemptive measure to prevent products from being trapped and damaged inside the equipment in the event that the automated logistics system halts due to a strike.

Experts are concerned that the actual scale of damage caused by the strike will far exceed the 18-day strike period (May 21 to June 7). As the semiconductor industry relies on ultra-precise, around-the-clock processes that cannot be interrupted, it is analyzed that production disruptions are inevitable for over a month, taking into account both pre-strike preparations and post-strike normalization of production lines.

The estimated direct loss is substantial. Professor Kwon Seokjun of Sungkyunkwan University stated in a foreign media interview, "It is estimated that Samsung Electronics will incur direct losses of between 10 trillion and 17 trillion won over the 18-day strike, and indirect damages could be even greater." Some observers suggest that if manufacturing processes are completely halted, the total direct and indirect losses could reach as much as 100 trillion won.

The damage is not limited to direct losses. Experts commonly point out that, should supply disruptions become a reality during this period of intense competition for dominance in the artificial intelligence (AI) semiconductor sector, it could lead to the "permanent loss of market share" as customers leave for good. In fact, major global Big Tech clients have already contacted Samsung Electronics directly to inquire about the stability of semiconductor production and potential supply disruptions, requesting weekly updates and closely tracking the situation.

Lee Changhan, former Vice Chairman of the Korea Semiconductor Industry Association, commented, "Typically, when a strike starts, competitors use it as an opportunity to ask buyers to switch their business to them. While there are short-term losses due to supply disruptions in areas such as memory, there is also the risk of long-term contract reliability issues if the strike drags on." He added, "Chinese memory companies still lag in technology, so they are not likely to benefit immediately, but competitors like Micron could be affected."

The company demonstrated its final intent to negotiate by sending an official letter to the union the previous day, requesting the resumption of direct talks. Even after the post-mediation process led by the Central Labor Relations Commission had ended, management expressed its intention to reach an agreement through voluntary negotiations.

In this context, Jun Younghyun, Vice Chairman and Head of the Device Solutions (DS) Division, who leads Samsung Electronics' semiconductor business, reportedly emphasized at a recent management briefing for executives that "although the company is facing various challenges, business operations must continue, and each division must perform its business activities well."

However, the union remains steadfast in its intention to proceed with the general strike. In response to management's proposal for talks the previous day, the union stated, "We will engage in talks only if management's clear commitment to transparency in excess profit incentives (OPI), the removal of caps, and institutionalization is confirmed. Otherwise, we will respond with a strike, which is a legitimate industrial action."

Choi Seungho, Chair of Samsung Electronics Branch of the Super Corporation Labor Union, is seen attending the post-adjustment meeting held on the 11th at the Central Labor Relations Commission's First Mediation Conference Room in Government Complex Sejong, speaking to the press. Photo by Yonhap News

The company once again emphasized on this day that it had already presented a specific proposal regarding the transparency and removal of caps on performance incentives, as demanded by the union, during the Central Labor Relations Commission's mediation process in March. However, the union reportedly responded that it would only be willing to discuss the matter after July 7. The industry interprets this as the union intending to proceed with the entire general strike schedule as announced and, in effect, rejecting the proposal to reach an agreement before the strike begins.

Within and outside the industry, there is growing consensus that the government's invocation of emergency arbitration powers is no longer a choice that can be delayed. As the union has effectively rejected the company's proposal for talks, the absence of the possibility for voluntary negotiations—one of the key conditions for invoking emergency arbitration—has been confirmed. One semiconductor expert stated, "With the union having already walked away from the negotiating table and announcing a hardline struggle, it is difficult to expect a voluntary resolution. The government must actively use its legal tool of emergency arbitration to protect the national economy." An industry official also urged, "Given the enormous losses that could reach 100 trillion won and the anticipated competitive advantages for Chinese and Taiwanese rivals, the government should swiftly invoke emergency arbitration."

This content was produced with the assistance of AI translation services.