Samsung (SSNLF) Labor Talks Resume as Seoul Moves to Avoid a $668 Million Chip Shutdown Risk

Samsung Electronics Co. (SSNLF), the South Korean tech giant and one of the world’s top memory chip makers, is back in focus as the country works to avoid a strike that could hit its chip plants.

South Korea’s prime minister said Sunday that the state will look at all options to stop a strike or limit the harm if one takes place. That includes emergency arbitration, a rare step that would halt strike action for 30 days while a labor board works on the case.

The move comes as Samsung and its labor union are set to resume pay talks on Monday with a state mediator. The aim is to reach a deal before the dispute becomes a broader risk to South Korea’s chip supply chain.

Meanwhile, SSNLF shares rose about 114% year-to-date, closing at $140 on Friday.

Chip Losses Could Be Large

Prime Minister Kim Min-seok warned that even a short stop at Samsung’s chip plants could carry a steep cost. “Just one day of suspension at Samsung Electronics’ semiconductor factory is expected to incur direct losses of as much as 1 trillion won,” he said. That equals about $668 million.

Kim also said the bigger risk is that a brief halt in chip lines can lead to a much longer pause. In his view, the total hit could rise as high as 100 trillion won if chip materials have to be thrown out.

That explains why the state is moving fast. Samsung makes up 22.8% of South Korea’s exports and 26% of its stock market. The company also has more than 120,000 staff and works with 1,700 suppliers.

Still, the union said it would not give in to pressure from the threat of arbitration. It also said it would not agree to a pay deal if Samsung offered worse terms.

Is SSNLF a Good Stock to Buy?

Turning to the Street, Samsung Electronics has a Moderate Buy consensus, based on one analyst rating issued in the past three months. The average SSNLF stock price target is $153, which implies a 9.29% upside from the current price.