Samsung Strike Could Drag Down Entire Kospi, Speed Foreign Outflows, Business Groups Say

Six business groups urge Samsung union to withdraw strike

Losses feared despite a "historic opportunity" in semiconductors

Smaller suppliers and workers also at risk

"A strike at the top company by market value would pull down the entire Kospi"

South Korea’s business community called on Samsung Electronics’ union to withdraw its planned general strike, saying a walkout could send shockwaves well beyond the company at a time of surging demand for AI chips and a memory-market upcycle. Any large-scale strike could disrupt industrial ecosystems at home and abroad, they said.

On May 18, six business groups — the Korea Enterprises Federation, the Korea Chamber of Commerce and Industry, the Federation of Korean Industries, the Korea International Trade Association, the Korea Federation of SMEs and the Korea Federation of Medium-Sized Enterprises — issued a joint statement urging the Samsung Electronics union to abandon its strike plan.

The groups said a strike by Samsung Electronics’ union could undermine the foundation of one of the country’s core industries. They urged the union to withdraw its plan and resolve the dispute through dialogue.

The six groups described the current moment as a "historic opportunity." With competition for leadership in AI semiconductors intensifying and global supply chains being reshaped, a large-scale strike at such a critical juncture could cost the country a major opportunity, they said.

They also raised safety concerns tied to the nature of semiconductor production. Because chip fabrication lines must run around the clock, a strike that stops those lines could lead to mass wafer disposals, equipment damage and even major accidents such as chemical leaks, the groups said.

The groups also warned that the fallout could spread to suppliers. A full-scale strike by Samsung Electronics’ union could deal a direct blow to thousands of small and mid-sized partner companies, their employees, and the broader semiconductor materials, parts and equipment sector, they said. Suppliers already struggling with high inflation, high interest rates and an economic slowdown could face production disruptions that lead to factory shutdowns and job insecurity.

Disruptions in semiconductor supply could also unsettle parts procurement across the global electronics industry and weaken market competitiveness, the groups said.

The statement also criticized the union’s performance-pay demands. The groups said restraint and compromise were needed to prevent broader social conflict. They estimated the union’s demand at about 45 trillion won ($32.6 billion), more than four times total shareholder dividends for 2025, and said such a payout could seriously undermine the company’s capacity for sustainable investment and future competitiveness.

They added that it is difficult to find major overseas companies with prearranged systems that guarantee workers a fixed share of operating profit. In general, decisions on how to use operating profit are left to the board’s management judgment, they said.

Even when companies share part of their profits with workers, they typically rely on various methods including stock compensation tied to specific conditions, the groups said. A union demand for direct cash payments exceeding annual salaries is inappropriate and excessive, they added.

The groups again put the union’s demand at about 45 trillion won ($32.6 billion), saying it amounts to more than four times total shareholder dividends for 2025. They said such demands could erode investment capacity and future competitiveness. They also criticized the proposal as one that could deepen labor-market dualism and widen social tensions.

If the strike goes ahead, the groups said the government should immediately invoke emergency arbitration powers. Semiconductors account for about 37% of South Korea’s total exports in 2026, they said. A strike at Samsung Electronics could directly lead to a drop in exports, a worsening trade balance and tax-revenue shortfalls, hurting the broader economy.

They also said a decline in the Kospi would be unavoidable. Samsung Electronics accounts for about 25% of the benchmark’s market capitalization, the groups said. Losses caused by a strike would weigh on the broader index, accelerate foreign investor outflows and sharply weaken South Korea’s capital market.

If a strike occurs, emergency arbitration powers should be triggered immediately to prevent irreversible damage to the national economy and industrial ecosystem, the groups said. They added that the business community would actively support Samsung Electronics so it can overcome the crisis through mature labor-management relations and continue serving as a driver of South Korea’s economic growth as one of the country’s leading global companies.

Kim Dae-young, Hankyung.com reporter kdy@hankyung.com