Academics Warn: Samsung Union Strike Could Lead to Loss of Market Leadership Beyond Financial Damages

As the labor union at Samsung Electronics has announced a strike scheduled for next month, academics are warning that the impact could go far beyond tens of trillions of won in financial losses. They point out that the repercussions could include irreparable damage to trust and disruptions to the supply chain. Analysts note that a strike during a semiconductor supercycle could not only cause unprecedented losses but also lead to customer attrition, supply chain restructuring, and a loss of market leadership.

According to industry sources on April 26, Professor Heonjae Song of the Department of Economics at the University of Seoul recently presented these prospects at a seminar hosted by the Public Policy Forum. The Public Policy Forum is a private policy research forum chaired by Yoo Il-ho, former Deputy Prime Minister and Minister of Strategy and Finance.

Professor Song estimated that if the Samsung Electronics union strike becomes a reality, losses from factory operation disruptions could reach tens of billions of won per minute, and about 1 trillion won per day. If the strike is prolonged, he projected that operating profit in the semiconductor division alone could decrease by up to 10 trillion won.

Professor Heonjae Song, Department of Economics, University of Seoul, presenting. Anmin Policy Forum.

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In particular, some analyses suggest that the spread of customer anxiety, the loss of business partners, and the resulting pressure for supply chain restructuring could pose even greater risks than the direct losses from production disruptions. Professor Song stated, "Global big tech clients may consider alternative suppliers such as TSMC to diversify risk. Given the semiconductor industry's characteristics, where process verification requires significant time and expense, once a customer leaves, it is extremely difficult to win them back."

In fact, AMD includes supply chain resilience as an item in its ESG (environmental, social responsibility, and corporate governance) evaluations, and Nvidia directly factors quarterly and semiannual supplier evaluation results into its allocation of orders.

As major clients are strictly evaluating supply stability, there are growing concerns that production disruptions from a strike could immediately lead to a loss of leadership in the global market. Professor Song distinguished "visible costs" such as production stoppages and sales declines from "invisible costs" such as weakened trust, delayed investments, and shocks to the industrial ecosystem. He emphasized that these invisible costs could have longer-term and more severe impacts.

Specifically, he identified the following key factors as "invisible costs": the loss of trust capital, permanent market loss due to switching costs, missed opportunity costs during the era of AI semiconductor leadership competition, the outflow of core talent, and the deepening of the so-called "Korea discount."

Professor Song stated, "Semiconductor technology can lose competitiveness if it falls behind by even one or two years. At a time when Nvidia, TSMC, and Intel are fiercely competing for AI semiconductor dominance, expending resources on internal conflict resolution itself represents an enormous opportunity cost."

Recently, Taiwanese media have also predicted that if production disruptions at Samsung Electronics become a reality, Taiwanese semiconductor companies could benefit and gain stronger bargaining power in pricing negotiations.

The Samsung Electronics strike could negatively affect the overall industrial ecosystem, which includes 1,764 suppliers of materials, parts, and equipment. In particular, the Pyeongtaek Campus is known to create employment for about 30,000 people per production line, including partner companies. Therefore, operational suspension could directly impact local employment and commercial districts.

Professor Song cited the lack of transparency in performance-based pay calculations and information asymmetry as the background to the current conflict. He explained the situation using the "Hicks Paradox," stating that even though both labor and management recognize that a strike is detrimental to all, inefficient equilibrium arises as both sides withhold or exaggerate information.

Accordingly, he proposed six key solutions: public disclosure of performance-based compensation criteria; establishment of a compensation system based on objective management metrics such as ROIC (Return on Invested Capital), TSR (Total Shareholder Return), and EVA (Economic Value Added); differential allocation according to profit ranges; introduction of cap, floor, and clawback mechanisms; implementation of external verification and arbitration systems; and institutionalization of pre-strike mediation procedures (cooling-off periods).

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