Samsung Electronics, the world’s largest maker of smartphones, TVs and memory chips, is planning a major global layoff that will be as high as 30 percent in some of its overseas divisions, according to people familiar with the matter.
One of the people familiar with the matter said the plan will be implemented by the end of this year and will affect jobs in the Americas, Europe, Asia and Africa. Two other people familiar with the matter claimed that Samsung has asked its subsidiaries around the world to reduce sales and marketing staff by about 15 percent and administrative staff by up to 30 percent.
In fact, South Korean media have also recently reported that Samsung Electronics has decided to reduce its Chinese sales and production unit staff by a certain number by next year and has initiated a layoff process, marking the beginning of a broader restructuring plan for Samsung.
However, it is unclear how many people will be laid off and which countries and business units will be most affected.
Samsung said in a statement that the staffing adjustments it is making in some of its overseas operations are routine operations aimed at improving efficiency. The adjustments have no specific targets and will not affect its production staff, the statement said.
According to Samsung’s latest sustainability report, by the end of 2023, the company will have 267,800 employees, with more than half of them (147,000) working overseas.
Manufacturing and developers make up the majority of those jobs, with about 25,100 in sales and marketing and 27,800 in other areas, according to the report.
The “directive” on global layoffs was issued about three weeks ago, and Samsung India is already offering severance packages to some mid-level employees who have left in recent weeks, people familiar with the matter said. More than 1,000 layoffs are likely in India, where Samsung employs about 25,000 people.
Samsung dilemma
This layoff plan reflects the significant pressure Samsung is facing amid a challenging business environment. Last year, Samsung’s annual operating profit fell below 10 trillion won, reaching its lowest level in 15 years.
In May, Samsung took steps to address its “semiconductor crisis” by replacing the head of its semiconductor division. The company is striving to catch up with rival SK Hynix and maintain its leading position in the field of high-end artificial intelligence (AI) chips.
Samsung also faces intense competition in the high-end smartphone market from Apple and China’s Huawei. This week, Huawei unveiled its Mate XT Extraordinary Master tri-folding phone, which has captured worldwide attention, putting further pressure on Samsung.
Meanwhile, Samsung has been dealing with a large-scale strike in India, which started on Monday. The strike has already caused partial production disruptions in factories, with workers demanding higher wages and better benefits.
The layoffs come as Samsung tries to cut costs and improve profitability in response to slowing global demand for technology products amid the global economic downturn. According to sources, this cost-saving measure is crucial for Samsung as it seeks to stabilize its earnings in uncertain market conditions.
Shares of Samsung Electronics, South Korea’s most valuable stock by market cap, have fallen to their lowest level in 16 months. Some analysts have reduced their profit forecasts for the company, citing weak demand for smartphones and personal computers, as the recovery in the tech sector remains sluggish.
A multifaceted challenge
In response to the declining demand, Samsung has also scaled back its memory chip production, a critical component of its business, as global memory prices have dropped sharply in recent months. Despite these challenges, Samsung is committed to maintaining its leadership in the semiconductor industry, though it faces stiff competition from rivals like Micron and SK Hynix.
Adding to the challenges, Samsung is grappling with rising raw material and logistics costs, which have further squeezed profit margins. The company has attempted to offset these costs by raising prices on certain consumer electronics, including smartphones and home appliances. However, this approach has had limited success, as consumers worldwide continue to curb spending due to inflation concerns.
To mitigate these difficulties, Samsung has been exploring new growth areas such as electric vehicle components, healthcare technologies, and renewable energy solutions. While the company has invested significantly in these sectors, it remains uncertain whether these new ventures will be enough to compensate for the losses in its core businesses.
At the same time, Samsung’s board is facing increasing pressure from shareholders to take more aggressive actions to improve profitability. Some investors have called for larger-scale restructuring, asset divestitures, and a sharper focus on emerging technologies like AI and quantum computing. However, the company’s leadership remains cautious, opting for a more gradual approach to avoid further destabilization.
The layoffs and restructuring have also sparked concerns about Samsung’s ability to retain key talent in the long term. Industry experts warn that cutting its global workforce could result in the loss of experienced professionals, potentially hindering innovation in critical areas like semiconductor development and smartphone technology. Nevertheless, Samsung has emphasized that it will continue to invest in research and development despite its current cost-cutting measures.
As Samsung navigates these turbulent times, its future will depend on how effectively it balances short-term profitability with long-term innovation. With competition intensifying and the technology landscape evolving rapidly, the stakes have never been higher for the global electronics giant.
