A Micron Union in Taiwan Voted 99% to Authorize a Strike. Should You Sell the Stock?

Workers at Micron Technology (NASDAQ:MU) in Taiwan have come a step closer to a strike. On Oct. 7, the union at the memory maker's Taoyuan site said 1,994 members voted to authorize a strike over how Micron splits its profits. This was 99% of the ballots cast. Just 14 voted against.

No strike date has been set. The union asked members to take Monday, Oct. 19, off for a rally in Taipei, which it said wouldn't be a strike. But the union's chair has said a surprise walkout, announced to members by text on short notice, is on the table.

When I covered the dispute in early September, I thought a deal was the likelier ending. As of this writing, the growth stock trades near $879, off about 28% from its record close of $1,213.56 in late June.

Image source: Micron.

A tougher line

In an August poll, over 80% of participating union members backed strike action. Then mediation between Micron and the Taoyuan union ended without a deal in September.

In prepared remarks for its Sept. 30 earnings call, CEO Sanjay Mehrotra said the firm had raised fiscal 2026 incentive pay for all employees worldwide.

But that didn't settle the dispute. The union wants a permanent system that gives 15% of Micron's operating profit to workers.

Pressure on the tech firm is coming from outside, too. Taiwan's labor ministry urged Micron to offer "concrete, feasible proposals."

And on Oct. 15, President Lai Ching-te called on both sides to negotiate sincerely at the opening of Micron's new Taichung plant, which packages and tests high-bandwidth memory (HBM) for AI systems.

How much output is at risk?

Taiwan arguably matters more to Micron than any other country. A majority of the company's DRAM output in fiscal 2026 came from its fabs there, according to its annual report.

And DRAM is most of the business. Showing how fast it's grown, Micron's DRAM revenue hit a record $39.8 billion in the fiscal fourth quarter, up 27% from the previous quarter and 343% year over year. That was 73% of total revenue. Taiwan also had $27.6 billion of Micron's long-lived assets (mostly plants and equipment) at the end of fiscal 2026, versus $19 billion a year before -- around 43% of the company's total.

But the strike vote so far covers the smaller of Micron's two big Taiwan sites. Taoyuan's union has 2,258 registered members, and the fab there mainly makes DRAM.

Taichung is Micron's largest base in Taiwan, and its union, which represents around 10,000 workers there and in Tainan, hasn't voted. It holds a second mediation session with the company on Oct. 22, and a failed one might lead to a strike vote there, too.

Micron has already sold much of its supply

Delays might cost Micron more than usual, because much of what its fabs make is already spoken for. On its Sept. 30 earnings call, management said over 75% of Micron's fiscal 2027 shipments were already committed.

"We have already sold out all the capacity for 2027 that this factory will build," Micron President and Chief Operating Officer Manish Bhatia said at the Taichung opening.

A long strike, then, might leave Micron short on deliveries it's already promised. Micron's latest annual report warns that labor disruptions "could also impair our ability to meet delivery schedules under strategic customer agreements, which could result in contractual liability, loss of customer confidence, or diversion of customer demand to competing suppliers."

Of course, I think the more likely cost is a richer pay plan. Notably, Micron's annual report now names new profit-sharing or bonus programs among the ways a labor dispute might get settled.

Under the union's 15% formula, Micron's fiscal 2026 operating income of $99.3 billion (up from $9.8 billion in fiscal 2025) would have meant around $14.9 billion for employees. The payout would be around a third of the $43.8 billion in operating income Micron made in the fiscal fourth quarter alone. And at around 12 times fiscal 2026 earnings, investors aren't paying as if this level of profit will last anyway.

Could a strike hurt the stock? A long one at Taichung could. But I still think a deal is the more likely outcome, and I don't see the vote as a reason to sell. If Taichung's union goes to a strike vote after its Oct. 22 meeting, though, I'd take the risk of lost output much more seriously.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.