Samsung Starts Shutting Down Chip Production Lines Ahead of 18-Day Worker Strike

Samsung is gradually winding down its factory production as an 18-day strike looms over the company facilities. According to South Korean news outlets, Samsung is slowing its manufacturing operations to enter what is referred to as emergency management mode, which essentially limits production capacity. According to the Seoul Economic Daily, about 43,286 factory workers have joined the picket line for the strike, which is more than half of the entire semiconductor division (DS unit) labor force. As factories face worker shortages, production lines are gradually stalling. In emergency mode, Samsung will restrict the number of new wafers introduced into the production process, which is a long and demanding procedure that typically runs 24/7. Interestingly, the factory can still operate at minimum production capacity thanks to the extensive automation involved, but operating machines still requires human involvement.

TrendForce estimates that about 3-4% of the world’s global DRAM supply could be disrupted, along with about 3% of the world’s NAND Flash supply. At a time when DRAM and NAND Flash shortages are at their peak, this will exacerbate the global supply chain situation. The targeted production lines in the strike are for HBM, (LP)DDR5, and some custom logic production. If Samsung’s customers perceive uncertainty from the production capacity stall, many could shift to competitors like SK hynix or Micron. With more than half of the workforce absent, there will not be enough factory workers to keep production lines running, and output will drop significantly.

As the strike is expected to begin on May 21, there is one week of declining production leading up to the start date. Additionally, the strike is expected to last 18 days, and it will take another two to three weeks before production capacity is restored to full operations, meaning that about six weeks of high-volume manufacturing is at stake at Samsung Foundry. Some estimates suggest that the total loss from both direct revenue loss to Samsung and its customers could amount to about 100 trillion Won, which is approximately $67 billion in a worst-case scenario.