Samsung is facing a serious internal crisis. The company’s largest workers’ union is threatening a full-scale strike starting May 21, and with talks breaking down this week, Samsung is now reportedly weighing contingency plans that include scaling back chip production.
The stakes are significant. Over 40,000 workers could walk off the job if Samsung doesn’t meet union demands for bonus payments and other incentives. According to reports, the potential production losses could cost the company as much as $20 billion.
Why Samsung can’t just hit pause on chip production
Chip manufacturing isn’t the kind of operation you can switch off overnight. The machines involved are highly sophisticated and extraordinarily expensive, and any production changes require careful advance planning. The so-called “warm-down” process alone demands preemptive adjustments at least a week ahead of time. Stopping mid-production isn’t really an option since it can trigger significant losses on its own.
So Samsung’s reported strategy involves limiting new wafer input and shifting its product mix toward higher-margin items, most notably HBM (high bandwidth memory) chips. This approach would help minimize losses if the strike does go ahead, while keeping the most profitable lines running as long as possible.
Talks have collapsed with no deal in sight
There was cautious optimism earlier this week that negotiations between the union and management might produce some kind of agreement. That hope was quickly dashed. The union announced on Wednesday that talks had fallen through entirely, with no progress made. The May 21 deadline is now firmly in play.
Samsung’s chip business has been riding a strong wave of AI memory demand, making the timing of this dispute especially painful. A strike during a global memory super cycle would mean billions in lost revenue at precisely the wrong moment, not just for Samsung but for South Korea’s broader economy. The Korean government is reportedly stepping in to help mediate, aware that Samsung is one of the world’s leading memory chip suppliers and a disruption of this scale would have wide ripple effects.
Whether Samsung and the union can reach a last-minute agreement before May 21 remains to be seen. We’ll keep you updated as the situation develops.
