Samsung Electronics (005930.KS) rolled out a last-resort measure on Monday to reduce chip production through a "warm-down" process, as the union's joint struggle headquarters effectively moved toward a general strike.
According to the union, 43,286 workers had applied to join the strike as of Monday, approaching the union's original target of 50,000 participants. "Even at the current level, more than half of the entire semiconductor (DS) division workforce is joining, and the company judges that a de facto shutdown is imminent," an industry official said. "No factory can operate normally when more than 50% of the workforce is absent."
The company plans to minimize losses by reducing new wafer input before the general strike and removing wafers already in process up to safe stages. Equipment handling photo, etch, and cleaning processes, which carve semiconductor circuits, will enter standby mode and stop operating after completing scheduled production.
Once the warm-down begins, production of high-value-added products such as high-bandwidth memory (HBM) and double data rate (DDR) chips, which require large volumes of wafers, will inevitably decline. However, the process will improve workforce efficiency ahead of the general strike by reducing the number of personnel needed to operate and maintain equipment.
The industry estimates that if Samsung Electronics faces a general strike without implementing a warm-down, direct production damage alone would exceed 70 trillion won. When the Pyeongtaek campus was halted for 28 minutes due to a power outage in 2018, the damage reached 50 billion won, or approximately 1.78 billion won per minute.
If production is suspended for a full day, losses would approach 2.57 trillion won. Semiconductor experts estimate that daily damages could reach 3 trillion won when factoring in higher labor costs, materials, electricity fees, and recovery expenses compared to 2018.
Experts also estimate that even a partial reduction in factory utilization could result in daily damages exceeding 1 trillion won. Kwon Suk-joon, a semiconductor expert and professor of chemical engineering at Sungkyunkwan University, previously estimated that an 18-day general strike would cause direct losses of 10 trillion to 17 trillion won.
The semiconductor industry warns that damage could snowball when factoring in warm-down periods and production facility recovery time before and after the strike. In a recent report, KB Securities analyzed that if the strike lasts 18 days, restarting and normalizing the factory's automated lines would take two to three weeks.
If factory utilization stands at just 50% during the recovery period, an additional 20 trillion to 30 trillion won in damages could be added. While the union warned that a general strike could cause 30 trillion won in production damage, the industry judges that actual damage could be more than double.
A bigger problem is that the union's general strike could undermine the status and trust assets of Samsung Electronics, the world's top memory chipmaker. According to market research firm Counterpoint Research, Samsung Electronics recorded a 36% share in the global DRAM market in the fourth quarter of last year, overtaking SK hynix (32%) to reclaim the top spot after about a year. Samsung lost its No. 1 position to SK hynix in the first quarter of last year but returned to the throne by expanding DRAM production and boosting general-purpose DRAM sales.
However, if production volume declines due to the general strike, its industry-leading position will inevitably be at risk. Samsung Electronics has been racing ahead in the DRAM market on the strength of its overwhelming production capacity. According to Omdia, Samsung Electronics' DRAM output this year is about 8.175 million wafers, 27.9% and 127% more than SK hynix (6.39 million) and Micron (3.6 million), respectively. If Samsung Electronics halts production for about a month due to the general strike and recovery work, wafer output would decrease by 680,000 units, narrowing the gap with SK hynix.
The industry also sees significant concern that the trust relationships Samsung Electronics has painstakingly built with customers could be severely damaged. According to Samsung Electronics, this year's DRAM output has already been fully contracted in advance, or "sold out." If production is suspended due to the general strike, customers will not be able to receive DRAM supplies on time.
In addition, customers are more likely to shift their supply lines to SK hynix and Micron rather than place orders with Samsung Electronics, which is plagued by union risk. Furthermore, if Samsung Electronics' market position wavers, side effects could follow, including reduced utilization, employment cuts, and declining job creation capacity due to investment adjustments at more than 1,700 materials, parts, and equipment partners.
Song Heon-jae, professor of economics at the University of Seoul, pointed out that the general strike would expose Samsung Electronics to threats including the disappearance of trust assets, permanent market loss from switching costs, loss of opportunity costs during the race for artificial intelligence (AI) chip supremacy, departure of core talent, and deepening of the "Korea discount." He warned, "Customers who leave once are difficult to bring back."
