[Alpha Biz= Kim Jisun] Warnings are growing that a full-scale strike at Samsung Electronics could inflict significant damage on the broader economy, as stalled semiconductor production and disruptions across its vast supplier network threaten to ripple through multiple sectors.

According to industry sources on May 10, Samsung Electronics’ suppliers are preparing contingency plans ahead of a potential general strike by the company’s labor union, scheduled to begin on May 21 and last for 18 days.

The company’s sustainability report shows that, as of 2024, Samsung Electronics has 1,061 primary suppliers and 693 secondary and tertiary suppliers. If the strike materializes, these roughly 1,700 partner firms—many of them small and mid-sized enterprises—are expected to face immediate financial strain.

Suppliers had already ramped up production and secured components in anticipation of a record semiconductor “super cycle.” However, a halt in Samsung’s memory production lines could sharply reduce factory utilization rates, leaving suppliers with excess inventory and disrupted operations.

Union data suggests that even a half-day rally held at the Pyeongtaek campus on May 23 led to a 18.4% drop in daily memory output and a 58.1% decline in foundry production. A representative from a wafer component manufacturer said, “We aligned our production plans with Samsung’s orders, but if semiconductor output declines, we will be forced to absorb unsold inventory.”

The potential impact extends to regional economies as well. A 2019 study by the Seoul National University Economic Research Institute estimated that the construction of a single semiconductor production line generates approximately KRW 128 trillion in production effects, KRW 47 trillion in added value, and 370,000 jobs. Delays in the construction of Samsung’s P4 and P5 plants in Pyeongtaek due to production disruptions could therefore weigh heavily on the local economy.

Global investment banks are also closely monitoring the situation. Citigroup recently lowered its target price for Samsung Electronics from KRW 320,000 to KRW 300,000, citing concerns over labor-related risks. JPMorgan warned that rising labor costs could put downward pressure of up to 12% on the company’s operating profit this year, while production disruptions could reduce semiconductor division revenue by 1–2%.

Meanwhile, retail shareholders of Samsung Electronics, including groups such as Act Team, are reportedly preparing a class-action lawsuit against the union to seek accountability for potential losses stemming from the strike.

 

 

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