AI Crisis Averted: Samsung Worker's Union Calls off Strike
A labour dispute at Samsung Electronics that could disrupt the supply of memory chips that power AI data centres across the globe is now seeing the light of resolution.
Nearly 48,000 unionised workers at the company had planned to strike for 18 days starting 21 May 2026, but have now called off the walkout, hours before it was scheduled.
Samsung produces 36% of the world's DRAM chips and maintains a dominant position in high-bandwidth memory production. According to industry reports, these components are required to train and deploy large language models and other AI systems.
The union has now announced that it has reached a tentative deal with management, which is awaiting a vote by union members and marks an early victory for employees demanding higher pay amid sky-high profits.
The planned strike represented 38% of Samsung's domestic workforce, making it the largest work stoppage in the semiconductor industry's history, with devastating consequences had it materialised.
AI infrastructure at risk
Jeff Kim, Analyst at KB Securities, had previously told Reuters that the strike could disrupt global DRAM supply by 3% to 4% and NAND memory supply could fall by 2% to 3%.
Data centre operators rely on DRAM for processing AI workloads. High-bandwidth memory chips enable the rapid data transfer required for neural network training.
A supply shock of this magnitude could delay planned AI data centre deployments. It could also increase costs for companies building out machine learning infrastructure.
Samsung operates 24-hour chip factories in Pyeongtaek and Hwaseong across three shifts. A South Korean court partially granted an injunction requiring essential staffing levels to be maintained during the strike.
Compensation disputes between competitors
The dispute had centred on compensation gaps between Samsung and SK Hynix. SK Hynix is the world's second-largest memory chipmaker.
Workers are unhappy that SK Hynix employees received performance bonuses more than three times higher than those at Samsung last year.
SK Hynix overhauled its pay structure in 2025 by removing a 10-year cap on bonus pay.
The company now allocates 10% of annual operating profit to performance bonuses.
Profit forecasts for 2026 indicate that this translates to average pay-outs of US$460,000 to US$477,000 per worker this year.
Samsung paid no performance bonuses in 2024 as its chip unit posted operating losses during the memory downturn. However, the unit reported in Q1 2026 operating profit increased nearly eightfold.
The National Union of Samsung Electronics had demanded that the company abolish its cap on bonuses, which limits them to 50% of annual salaries.
The union also wanted Samsung to allocate 15% of annual operating profit to a bonus pool and make these changes binding beyond this year.
In the tentative deal reached on Wednesday (21 May), Samsung has agreed to abolish the existing bonus cap and allocate 10.5% of business performance profits to fund bonuses.
“The agreement came later than expected,” Samsung notes in a statement given on Wednesday.
“We will work to build a more mature and constructive labour management relationship so that such a situation does not happen again.”
Production impact on AI supply chains
A comparatively minor one-day labour walkout in April over the same issues showed the damage an extended strike could cause.
According to industry reports, foundry output dropped 58% and memory fabrication fell 18% during that affected shift.
An 18-day shutdown would have led Samsung to scrap ultra-sensitive silicon wafers that cost US$20,000 each and threaten to reduce memory chip supply at a time when AI demand has created shortages.
As one of the world's largest DRAM makers, Samsung commanded 36% of the DRAM market at the end of last year, industry reports note.
South Korean government officials were previously pressing the union because Samsung accounts for nearly a quarter of the country's exports.
“Any disruption to Samsung’s semiconductor production would go far beyond losses for a single corporate group, leaving deep scars across the national economy,” says Kim Min-seok, South Korea’s Prime Minister.
An anonymous official at the central bank predicted that the walkout could shave 0.5 percentage points off a forecast 2% expansion in the South Korean economy this year, assuming that around KRW 30 trillion, or US$19.9bn, of chip production could be lost.
