Whalesbook
AI Chip Supply Faces New Threat
Samsung Electronics faces rising labor tensions, with about 37,000 workers planning a rally at its Pyeongtaek chip complex. This action, ahead of a potential strike starting May 21, threatens the global supply chain for artificial intelligence chips.
The semiconductor industry is seeing massive demand as AI fuels strong market growth, projected to exceed 20% in 2026. This boom has created a tight supply-demand balance, especially for memory chips. AI demand is already causing shortages that affect markets like PCs and smartphones. Any disruption at Samsung, the world's largest chip maker, could worsen these shortages, push prices up, and greatly benefit rivals like SK Hynix. As of April 22, 2026, SK Hynix shares traded near 1.2 million KRW, while Samsung Electronics (005930.KS) was around 217,500 KRW.
Workers Gain Leverage at Samsung
This labor unrest is a major shift for Samsung, known for avoiding unions. Since its first worker walkout in 2024, union membership has reportedly tripled to over 90,000, now representing more than 70% of its South Korean staff. Record semiconductor profits, driven by the AI boom, are fueling this growth.
Workers point to a pay gap compared to rivals like SK Hynix, which recently updated its compensation and bonus plans. Union leader Choi Seung-ho called it a unified push for change, noting that employees are seeking jobs at SK Hynix and Micron. Samsung's Co-CEO Jun Young-hyun admits wage competitiveness is an issue but expects it to improve as the market recovers. Samsung's market cap is about 1.43 quadrillion KRW (P/E ~32.70), while SK Hynix's exceeds 800 trillion KRW (P/E ~19.31).
Beyond the Strike: Financial Stakes High
While automation and subcontractors might lessen a strike's full impact, union demands are significant. They want to remove the performance pay cap (now 50% of base salary) and get 15% of annual operating profit as bonuses, plus a 7% base salary increase. Management has offered 10% of operating profit for performance pay and extra funds to boost memory division payouts.
This standoff happens during fierce competition. SK Hynix recently reported a five-fold increase in first-quarter operating profit, showing strength in AI memory. Samsung's own production is also under review; reports from March 2026 indicated intentional production cuts, with plant use around 70%, to support higher prices. A strike could let SK Hynix, which has a "BUY" rating and saw its stock hit record highs near 1.2 million KRW, gain market share. Samsung's stock has jumped 244.83% in the past 12 months to about 219,000 KRW (April 21, 2026), but a long strike could threaten this rally. Some analysts warn higher fixed costs could hurt competitiveness and stock value. A shareholder group even called the union's demands "outrageous".
Market Outlook and Labor Dispute
The semiconductor market is set for major growth in 2026, with sales expected to reach $975 billion, largely due to AI. However, this positive forecast is clouded by potential supply chain disruptions. Samsung's Q1 2026 operating profit is projected to top 50 trillion won, almost matching its total for 2025. Yet, this achievement is threatened by internal labor friction.
Analysts offer mixed views, with some like Susquehanna upgrading Samsung to "strong-buy," while others point to labor dispute risks. The company plans to release Q1 2026 earnings guidance around April 8th and its full report around April 22-23, 2026. If talks fail, the planned 18-day strike from May 21 could cause significant sales drops due to low inventory. This could allow rivals like SK Hynix to strengthen their position in the vital AI memory market. The situation highlights the difficult balance between tech demand, company profits, and labor relations in the competitive semiconductor sector.