Rumors that Nvidia will refuse strike-produced shipments are spreading, prompting a flood of inquiries from around the world over whether deliveries will arrive on time.
‘Nvidia is refusing strike-period shipments’ rrmor spreads.
The inside of Samsung Electronics is in turmoil. Although the company is officially denying it, a rumor that Nvidia will not accept volumes produced during the strike is rapidly spreading, raising a growing sense of crisis that it could potentially lose its largest client and be phased out of the global supply chain. This is due to the fact that a drop in yield (the ratio of normal products to total produced items) and delivery delays could become inevitable during the strike period. If the departure of clients becomes a reality, the company will not only lose its largest semiconductor customer but will also be forced to pay massive penalty fees for disruptions in contract fulfillment.
It has been found that Jeon Young-hyun, the CEO and Head (Vice Chairman) of the Device Solutions (DS) Division at Samsung Electronics, recently instructed internally, “Even if semiconductor production completely stops during the strike period, prepare measures to secure quality first.”
According to the semiconductor industry on May 18, inquiries from big tech companies are reportedly flooding in regarding the possibility of a general strike and whether they can receive their memory semiconductor volumes on time. The internal anxiety has especially surged as rumors circulate that Nvidia, to which Samsung Electronics has barely begun supplying High Bandwidth Memory (HBM) semiconductors for artificial intelligence (AI), stated it would not accept products manufactured during the strike period.
AI accelerators are built using memory produced by Samsung Electronics, and if defects occur, the entire system must be discarded, which is why other big tech companies are also reportedly on high alert regarding the impact of the strike. As about 40,000 people, which is over half of the entire workforce (75,000 employees) in the Samsung semiconductor division, are scheduled to participate in this general strike, relentless concerns are arising that disruptions could occur in normal product manufacturing.
As customer concerns flood in like this, Vice Chairman Jeon, the head of the semiconductor division, reportedly issued a directive recently to the manufacturing departments, stating, “Even if the input of semiconductor wafers is completely suspended during the labor union strike period, prepare measures to secure quality after the strike ends first.” This is interpreted as a determination not to let past research and development (R&D) efforts and customer trust turn into bubbles, even if it means enduring astronomical losses during the strike period.
The semiconductor industry expects that Samsung Electronics will suffer damages amounting to 100 trillion won ($68.02 billion) during this strike period, which is known to include massive compensation for delayed product deliveries in addition to the production halt. An industry source said, “Internal concerns are also growing over delays in bringing in equipment for semiconductor production lines currently under expansion, as well as reduced orders in the System LSI (design) and foundry (contract manufacturing) sectors, which have been riding an upward trend.”
With the scheduled date of the general strike by the Samsung Electronics labor union just three days away, foreign media are also paying close attention to the impact it will have on the global semiconductor supply chain. The German information technology (IT) media outlet TechPowerUp stated, “Samsung Electronics is supplying core AI infrastructure products such as HBM and server DRAM,” and added, “Even if a minor disruption occurs, there is a possibility that clients could divert their volumes to competitors such as Micron.”
Kim Eun-jin
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