Jun Young-hyun, vice chairman and chief executive of the Device Solutions division at Samsung Electronics, speaks at a company event held in Yongin, Gyeonggi, on April 3. [SAMSUNG ELECTRONICS]
Samsung Electronics has begun emergency measures to reduce semiconductor production in advance as the company braces for the largest general strike threat in its history.
Jun Young-hyun, head of the Device Solutions (DS) division and vice chairman of Samsung Electronics, reportedly convened executives for an emergency meeting and warned that “now is the last golden opportunity to restore competitiveness,” as management moved to tighten internal discipline. Strike-related losses have already begun to materialize, while direct and indirect damage could reach as much as 100 trillion won ($67 billion) if the dispute becomes prolonged, according to industry observers.
Jun reportedly told executives at a management briefing held on May 8 that they “must not become complacent with performance and regard the current semiconductor boom as the last golden opportunity to restore fundamental competitiveness.”
The remarks were interpreted as referring to the union’s planned 18-day general strike from Thursday through June 7.
Despite the memory chip boom, Samsung Electronics is facing risk both internally and externally, from labor-management conflict and intensifying global competition. Jun’s message to executives, therefore, was seen as an effort to minimize organizational disruption and maintain production stability.
In fact, Samsung Electronics’ DS division — the semiconductor sector — reportedly began full-scale “warm-down” operations Thursday to adjust production processes.
The Samsung Electronics flag, center, is seen in front of the company's building in Seocho District, southern Seoul, on May 13 [NEWS1]
A warm-down is an emergency measure used before expected factory shutdowns caused by strikes or natural disasters, in which production volumes are reduced in advance and facilities are shifted into stable operating conditions to minimize damage.
Semiconductor production lines operate continuously around the clock. If equipment suddenly stops, disruptions in temperature and pressure balance could force the disposal of wafers worth hundreds of billions of won.
“If a production line stops even once, the problem goes beyond temporary production disruption and can affect yields, quality and delivery schedules altogether,” an industry source explained.
Samsung Electronics is also reportedly reducing new wafer input volumes and restructuring production mixes to focus on high-value products such as high-bandwidth memory (HBM) chips and advanced process technologies.
At the company’s Pyeongtaek campus, workers reportedly separated about 15,000 wafer storage containers from logistics equipment on dynamic random access memory, or DRAM, production lines.
Members of Samsung Electronics' labor union hold a rally in front of the company's Pyeongtaek branch in Gyeonggi on April 23. [KIM KYOUNG-ROK]
The problem, industry observers say, is that the start of warm-down procedures itself already marks the beginning of tangible losses because reduced wafer input inevitably leads to lower output and delivery delays.
Industry sources said warm-down operations reduce the company’s ability to respond to new orders and make delays in some deliveries unavoidable.
The union claims a general strike could result in losses of as much as 1 trillion won per day, or up to 30 trillion won overall. Some industry observers estimate, however, that total direct and indirect losses — including damage to supply chain trust, customer losses, production line restart costs and harm to partner companies — could reach 100 trillion won.
On Friday, Samsung Electronics attempted to resume negotiations by sending the union an official document outlining the company’s position on disputed issues.
Choi Seung-ho, chairman of the Samsung Electronics chapter of the Samsung Group United Union, effectively rejected the proposal, saying, “We will discuss matters after June 7.” Choi has also maintained that the planned strike constitutes “the exercise of rights guaranteed under the Constitution.”
As the union remains adamant on a strike, signs of changing sentiment are also emerging within the government.
The semiconductor cluster under construction in Yongin, Gyeonggi, on Jan. 7, 2025 [WOO SANG-JO]
Until now, the government had emphasized resolving the dispute through autonomous labor-management negotiations. Labor Minister Kim Young-hoon, a former chairman of the Korean Confederation of Trade Unions, had recently maintained a cautious stance on the possible invocation of emergency arbitration powers, saying the issue “should be resolved through dialogue.”
Emergency arbitration authority is based on Article 76 of the Trade Union and Labor Relations Adjustment Act. If invoked, unions must immediately suspend strike activity for 30 days.
But Industry Minister Kim Jung-kwan wrote on social media Thursday that if a strike occurs, emergency arbitration may become "unavoidable," saying, “The moment competitiveness is lost, the issue will no longer be falling to second place but survival itself becoming difficult."
Observers say the government is beginning to leave open the possibility of exercising public authority because semiconductor supply chain stability is directly tied to the national economy.
Meanwhile, overseas competitors are also closely monitoring Samsung Electronics’ situation.
Taiwanese media outlets including DigiTimes and Liberty Times have recently reported on the Korean chipmaker's labor disputes and potential supply chain instability, raising the possibility that global big tech customers could shift orders elsewhere.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
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