How significant is the impact of the strike on Samsung? JPMorgan: Any pullback is a buying opportunity.
```
Samsung Electronics faces the threat of a large-scale strike, but JPMorgan believes that the strong rise in memory prices is enough to offset most of the impact, and the logic of buying on dips still holds.
According to Chasing Wind Trading Desk, on May 13, a JPMorgan research report by Jay Kwon’s team pointed out that if a large-scale strike at Samsung occurs as scheduled, it will impact Samsung’s operating profit in 2026 by 2.1 trillion to 3.5 trillion KRW and drag down the semiconductor division’s revenue by about 1% to 2%.
However, JPMorgan maintains an “overweight” rating on Samsung Electronics, and clearly states, “For any stock price pullback caused by the strike issue, we continue to recommend buying on dips.”
The report highlights that in the second quarter, DRAM contract prices increased by 58% to 63% quarter-on-quarter, while NAND prices surged by 70% to 75%, both far exceeding JPMorgan’s previous expectations of 40% to 50%. This stronger memory price cycle is expected to largely hedge against the cost pressures from labor disputes.
Mediation Breaks Down, Strike Imminent
This week, government-led labor mediation in South Korea broke down, and Samsung Electronics management and the National Samsung Electronics Union (NSEU) failed to resolve their differences.
The NSEU immediately announced an 18-day full strike to be launched from May 21 to June 7, with about 50,000 union members expected to participate—greater than the 37,000 to 40,000 involved in the April 23 rehearsal at the Pyeongtaek chip park.
The core points of contention between labor and management focus on two issues: eliminating the cap on Operating Profit Incentives (OPI) and legalizing the profit-sharing incentive mechanism.
JPMorgan analyst Jay Kwon pointed out that after the government-mandated mediation period from May 11 to 12, the positions of both sides have not significantly narrowed.
Samsung has applied to the court for an injunction against possible illegal industrial action by the union and is awaiting a ruling by May 21, but the outcome is still uncertain.
JPMorgan sees the court ruling by May 20 or a possible emergency mediation order as key upcoming events. Multiple Korean policymakers have expressed concern that the strike may impact the national AI supply chain’s stability.
Under statutory conditions, the South Korean Minister of Employment and Labor can issue an “emergency mediation order,” forcing a 30-day suspension of the strike.
JPMorgan points out that such measures have only four precedents in the past 57 years, most recently in December 2005 during the Korean Pilots Association strike.
Financial Estimates: Up to 3.5 Trillion KRW Downside on Full-Year Operating Profit
According to the latest JPMorgan analysis, if Samsung accepts the union’s proposals—using 10% to 15% of operating profit for OPI incentives and raising base salaries by 5%—
2026 labor costs will increase by 1.69 trillion to 3.04 trillion KRW compared to previous estimates. Combined with an estimated sales opportunity loss of around 4.5 trillion KRW, the overall impact on operating profit is estimated at 2.1 trillion to 3.5 trillion KRW.
JPMorgan believes, under the scenario of a 10%–15% OPI share, there is a 3%–7% downside risk to operating profit.
In terms of revenue impact, the 18-day strike is expected to reduce annualized DRAM shipment volume by about 1.0%, NAND by about 0.5%, foundry and System LSI business by about 2.1%, with total semiconductor division revenue affected by about 1%–2%.
If the strike impact worsens, and the daily production capacity of all Korean memory and foundry fabs is hit by 40% and 75% respectively, revenue opportunity loss could reach up to around 9 trillion KRW.
It’s worth noting that, compared with estimates on May 6, the impact from increased labor costs is slightly reduced this time because JPMorgan recalculated employee compensation structures and each business unit’s OPI pool in more detail.
However, as expected participation in the strike is higher than in the April 23 rehearsal, the estimated production impact has been revised up.
Soaring Memory Prices: The Largest Hedging Variable
JPMorgan believes the current trend in memory prices may be the biggest hedging factor.
The report cites media sources stating Q2 contract prices: DRAM rose 58%–63% quarter-on-quarter, NAND rose 70%–75%, driven mainly by increased CPU memory demand and tightening LPDDR5X supply.
JPMorgan points out that a higher profit base in Q2 helps offset rising labor costs. Market investors appear to be pricing in an “optimistic scenario,” that the strike could even be a positive catalyst for contract price negotiations in Q2 and Q3.
JPMorgan’s 2026 profit forecast is already higher than the Bloomberg consensus, predicting DS (semiconductor) division revenue of 47.09 trillion KRW, compared to the consensus of 44.32 trillion. The forecasted DRAM average selling price gain is 260%, notably higher than the consensus of 219%.
Short-Term Pressure, Long-Term Logic Unchanged
JPMorgan admits strike-related uncertainty may suppress share price performance in the short term and does not rule out Samsung underperforming memory peers.
Data shows that since April, Samsung Electronics’ share price has risen about 60%, SK Hynix about 122% during the same period, while the Korea Composite Stock Price Index rose about 48%.
Yet JPMorgan’s medium- to long-term logic remains unchanged: the memory upcycle is “higher, more sustained,” supplemented by continuous improvements in HBM (high-bandwidth memory) execution capabilities.
The current target price is based on a 2026–2027F PB of 2.2x, a 10% premium over the historical cyclical peak PB valuation, reflecting the multi-year memory upcycle and improving foundry order momentum.
Analysts also flag downside risks, including: a prolonged downcycle in memory prices, weaker-than-expected HBM demand from ASIC customers, and delays in HBM product recertification.
~~~~~~~~~~~~~~~~~~~~~~~~
The above excellent content comes from Chasing Wind Trading Desk.
For more in-depth interpretation, including real-time interpretation and frontline research, please join [Chasing Wind Trading Desk — Annual Membership]
Risk Warning and DisclaimerThe market has risks, and investments require prudence. This article does not constitute personal investment advice, nor does it consider the specific investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, views or conclusions in this article are appropriate to their specific circumstances. Investment is at your own risk. ```