South Korea's DRAM drama

The AI trade is roaring these days: Old school tech companies are learning new tricks, the latest tech IPO has enjoyed some serious hype, and retail investors are pouring money into the red-hot memory stock trade.

There’s plenty of enthusiasm for memory stocks across the Pacific, too: Shares of South Korean electronics giant Samsung have soared 394% over the past 12 months, and the company just climbed to a $1 trillion market valuation.

Samsung’s success is thanks to its control over about 36% of the global market for dynamic random access memory (DRAM) chips—the memory chips AI hyperscalers need to power their AI products. The company is reaping the rewards of a sudden global memory shortage, with hyperscaler demand for DRAM dramatically outpacing production, leading to a surge in orders for Samsung chips. The result: Last quarter its sales climbed 70% year over year, while its profit soared 750%.

But Samsung isn’t alone: Its biggest competitor is fellow South Korean tech powerhouse SK Hynix. While not as much of a household name, SK Hynix also makes high-bandwidth memory chips, controlling roughly 32% of the global DRAM market. Shares have popped 799% in the last year, putting SK Hynix well on its way to becoming the second company in South Korea to hit a $1 trillion valuation this year.

Here’s where the drama comes in

Despite (or perhaps because of) its recent success, Samsung is staring down the barrel of a massive strike. Unionized employees have asked management for 15% of all operating profits and to remove any caps to their bonuses, but after their demands weren’t met during recent negotiations, about 45,000 workers announced they’re going on an 18-day strike beginning on May 21.

In preparation, Samsung has already begun to “warm down” some of its equipment to prevent damage if operations are suspended, prioritizing manufacturing chips used by its biggest customers like Nvidia. But if a strike does arrive, the pain would be felt much further afield than just Samsung: Even a short-term disruption to the global supply of DRAM could cause a massive economic domino effect across the entire AI trade, pushing memory prices higher.

For now, Samsung has dodged a bullet: Earlier today a South Korean judge granted the company’s request for an injunction against the strike that should keep machines plugged in if workers walk out.

Despite the ruling, analysts expect that any further upheaval at Samsung would be great news for US-based Micron Technologies, which controls 23% of the DRAM market and could acquire new customers who can’t get their orders filled by Samsung.

By the way: In 2025, SK Hynix removed its bonus cap for employees for the next 10 years, which means many of its workers stand to make massive windfalls in excess of $470,000. That’s one way to make sure it won’t be encumbered by unhappy employees anytime soon.—MR