Labor-management conflict in Taiwan, the largest manufacturing base... Strike rights secured with 99.1% approval from Taoyuan unions Additional negotiations held on the 22nd immediately after the opening of the new HBM plant in Taichung... Concerns about supply disruption
At a time when Micron, an American memory semiconductor company, is expanding its high-bandwidth memory (HBM) production, it is facing a strike crisis in Taiwan, its largest manufacturing base. Following the labor union at the northern Taoyuan factory securing the right to strike, labor-management negotiations are continuing in central Taichung, where HBM's core production facilities are located. Micron, which has opened a new factory to increase the supply of artificial intelligence (AI) memory, is concerned that its production schedule may be disrupted.
In particular, Taichung is where the second high-tech packaging and testing factory opened on the 15th. Micron executives emphasized strong customer demand for 2027 production capacity during the opening ceremony. With the expansion of new facilities and labor-management conflict intertwined, the Taichung union will begin further mediation with management on the 22nd.
#### 99.1% in favor of strike… Taiwan's union is boiling over the performance bonus of 45 million won
Micron's DRAM production facility is located in Taoyuan, northern Taiwan, and approximately 3,000 people work at the local business. The union here recorded a 99.1% approval rating in the strike vote on the 7th. Of the 2,258 union members eligible to vote, 2,012 participated and 1,994 voted in favor.
The union's collective action movement has been visible since last August. In an internal survey conducted by the Taoyuan and Taichung unions at the time, more than 80% of responding union members supported strike action. Afterwards, mediation between the Taoyuan union and management ended without agreement, leading to a formal strike vote. The union plans to hold a rally in Taipei on the 19th and is considering an unannounced strike depending on the outcome of the negotiations.
The issue on which labor and management cannot narrow their differences is the method of distributing performance bonuses. As the company's performance has improved due to the AI semiconductor boom, employees are also demanding more profits. The plan proposed by the union is a long-term profit sharing system that allocates 15% of operating profits as performance bonus resources. The performance-linked compensation systems of Samsung Electronics and SK Hynix were also mentioned as a point of comparison.
Last month, Micron announced a compensation plan that would pay Taiwanese employees a one-time special bonus of up to NT$1 million (about KRW 45 million) per person. Annual performance bonus and stock compensation were also presented separately. However, the union is demanding the establishment of a permanent system to share profits based on annual performance rather than one-time compensation.
Negotiations are also underway in Taichung, Micron's core HBM production base. About 12,300 people work in Taichung, central Taiwan, where DRAM manufacturing and HBM's advanced packaging and testing facilities are concentrated.
The size of the Taichung union also grew rapidly. According to Taiwan's Commonwealth Magazine, the number of union members, which was initially about 400, increased to more than 10,000 after Korean semiconductor companies announced an increase in performance bonuses. The Taichung union is conducting separate negotiations with Taoyuan and is scheduled for an additional mediation meeting on the 22nd.
#### HBM base in Taiwan with $49.4 billion invested… New factory operation and labor-management conflict
Micron is headquartered in Boise, Idaho, but Taiwan is the company's largest manufacturing base. The number of local employees in Taiwan is approximately 15,000, and the cumulative investment exceeds NT$1.6 trillion (about US$49.4 billion).
The reason why American companies' core production facilities were located in Taiwan was the acquisition of a local semiconductor company. Micron acquired Taiwanese DRAM manufacturers Rexchip and Inotera, securing production lines and skilled technical personnel. Since then, Taiwan has grown into a central axis of advanced memory manufacturing by upgrading existing facilities and increasing production capacity.
Recently, investment in back-end processes necessary for HBM production has been expanded. HBM is a high-performance memory that stacks and connects multiple DRAM chips, and not only wafer manufacturing but also precise packaging and testing are important.
Micron held an opening ceremony for AATT2, its second state-of-the-art packaging and testing plant, in Taichung on the 15th. The company predicted that most of the HBM production volume in 2027 has already been reserved for customers, and that the growth rate of HBM demand will exceed that of general DRAM by 2028. In Singapore, HBM plans to expand its advanced packaging plant to increase production capacity from 2027.
If a production disruption occurs in a situation where a significant amount of HBM has already been allocated to the customer, the delivery schedule may also be affected. If a strike becomes a reality in Taichung, the possibility that HBM's packaging and testing processes will be disrupted cannot be ruled out.
Micron is also expanding its production facilities in Idaho and New York in the U.S. and Hiroshima, Japan. However, semiconductor factories take considerable time to install equipment, test production, and stabilize yields. Even if there is a production disruption in Taiwan, it is difficult for factories in other countries to replace the volume in a short period of time.
#### HBM4 supply disruption and profitability pressure... Watershed moment in negotiations on the 22nd
Semiconductor factories must operate production lines continuously. If there is a gap in equipment maintenance or process management, yield and production stability may be shaken, and the actual impact will vary depending on the number of participants in the strike, the duration, and the company's response.
Taiwanese market research firm Trend Force also warned that DRAM production could be affected if equipment management and process monitoring are disrupted due to the strike.
As HBM packaging and testing facilities are concentrated in Taichung, the scope to be investigated becomes wider if a strike becomes a reality. HBM's manufacturing process is more complicated than that of regular DRAM, and quality certification for each customer is important, so if post-processing is delayed, even the finished product shipment schedule may be affected.
Even if a strike is avoided, the union's demand for profit sharing is another burden on Micron. Daishin Securities pointed out Taiwan as a key base for mass production of the next-generation HBM4, pointing out the possibility of supply disruption due to strikes and an increase in labor costs due to the introduction of a profit-sharing system. If the union's demands are accepted, Micron's operating profit margin could also be affected.
Micron is a leading company in the global DRAM market along with Samsung Electronics and SK Hynix. In a situation where memory supply is tight, if production disruptions are prolonged, it may affect customer supply and price negotiations. In particular, HBM produces products based on customer-specific certification and long-term supply contracts, making it difficult for other companies to immediately supply insufficient quantities.
The Taiwanese government also urged both labor and management to conclude negotiations. Taiwan's President Lai Ching-de called on both labor and management to negotiate sincerely at the opening ceremony of the new Taichung factory on the 15th. The Taiwanese government is also supporting Micron's HBM research and development.
Unlike Taoyuan, the Taichung union is conducting a separate negotiation process, but as the number of union members exceeds 10,000, the impact of the negotiation results on the operation of local production facilities may be significant. The remaining issues are whether the differences surrounding the distribution of performance bonuses can be narrowed in the additional adjustment scheduled for the 22nd, and whether the HBM production schedule will be disrupted if the negotiations break down.
