Will Samsung Strike Trigger Global AI Memory Shortage?
The looming Samsung labour strike is risking a global shortage in the semiconductor supply chain that is already starving for silicon as AI keeps the chip demand at an all-time high.
Being the worldâs primary producer of DRAM and high-bandwidth memory chips, Samsung Electronics is a vital engine that keeps modern AI infrastructure running.
However, nearly 48,000 unionised workers plan to walk off production lines on 21 May for 18 days. This represents 38% of the domestic workforce at the company, making it the largest work stoppage in the history of the semiconductor industry.
If the workers at its South Korean factories go through with the strike, it could disrupt up to 4% of global DRAM supply. This in turn could delay AI data centre deployments and drive up semiconductor prices worldwide.
Battle over bonuses
The dispute stems from a widening compensation gap between Samsung and its smaller rival, SK Hynix. Workers are furious that SK Hynix employees received performance bonuses more than three times higher than those at Samsung last year.
SK Hynix is a major South Korean semiconductor company and the world’s second-largest memory chipmaker after Samsung.
The company overhauled its pay structure last year by removing its 10-year cap on bonus pay and allocating 10% of annual operating profit to performance bonuses.
Based on 2026 profit forecasts, this translates to average payouts from US$460,000 to US$477,000 per worker this year.
Samsung, on the other hand, paid no performance bonuses in 2024 as its chip unit posted operating losses during the memory downturn. However, the unit did achieve a good turnaround with Q1 2026 operating profit increasing nearly eightfold.
The National Union of Samsung Electronics is asking the company to abolish its cap that limits bonuses to 50% of annual salaries. The union also wants Samsung to allocate 15% of annual operating profit to a bonus pool and make these changes binding beyond this year.
Samsung management proposed that memory chip workers would gain a one-off bonus exceeding levels that SK Hynix workers receive this year. However, the company refuses to permanently abolish the 50% bonus cap in contracts, which remains the point of contention with its workers.
How the strike could play out
The planned strike will be far larger and far more damaging than the last walkout to affect the company, when about 6,000 workers went on strike in 2024 for better pay and benefits.
The 24-hour chip factories in South Korea operate across three shifts in locations such as Pyeongtaek and Hwaseong. A South Korean court partially granted a request from Samsung for an injunction, ruling that essential staffing levels must be maintained.
A minor one-day labour walkout in April related to the same issues showed what an extended strike could do to production. Foundry output dropped 58% and memory fabrication fell 18% during that affected shift, according to industry reports.
A full shutdown for 18 days means the company will have to scrap ultra-sensitive silicon wafers that cost US$20,000 each. Samsung has already begun warm-down procedures to scale back wafer inputs and protect machinery before Thursday.
The strike also threatens to dent the supply of memory chips at a time of severe shortages which follows the AI boom. Samsung is the largest maker of DRAM chips in the world, commanding 36% of the market at the end of last year, as per reports.
If it is initiated on 21 May, it could disrupt global supplies of DRAM memory by 3% to 4% and NAND memory by 2% to 3%, Jeff Kim, analyst at KB Securities, explained to Reuters. This supply shock would likely fuel further global tech price increases.
South Korean Government officials are piling pressure on the union because Samsung accounts for nearly a quarter of the exports from South Korea. Industry Minister Kim Jung-kwan told parliament that all citizens are worried about the ripple effects.
The walkout could shave 0.5 percentage points off a forecast 2.0% expansion in the South Korean economy this year, an anonymous official at the central bank says. This assumes that around 30tn won, which is US$19.9bn, of chip production could be lost.
Beyond rising chip prices, Samsung also fears being overtaken by its neighbourhood rival SK Hynix, which is slowly inching towards a US$1tn market cap.
If Samsung is going to defend its global dominance in the semiconductor sector, it will first have to resolve its internal disputes and put its own house in order.
