Samsung to slash thousands of jobs amid global challenges
Samsung to slash thousands of jobs amid global challenges
Major cuts of up to 30% expected in sales and admin roles.
The electronics giant Samsung is preparing to make significant reductions to its workforce outside South Korea, potentially cutting up to 30% of employees in certain divisions, according to a Reuters report.
Samsung, a leading player in smartphones, smart TVs, memory chips, and white goods (such as stoves and refrigerators), is facing challenges across various aspects of its business. Sources informed Reuters that the company has instructed its units outside South Korea to reduce their sales and marketing staff by up to 15% and their administrative staff by up to 30%. These cuts are expected to be implemented before the end of the year in Samsung’s offices across the Americas, Europe, Asia, and Africa. It is currently unclear how many jobs will be affected and which countries or business units will experience the most significant reductions.
As of the end of 2023, Samsung employed 267,800 workers, with 147,000 (about 55%) based outside South Korea. Most of these employees are in manufacturing roles, which are not expected to be affected by the upcoming cuts, according to the company's statement. Approximately 25,100 employees are in sales and marketing roles, and up to 27,800 are in other fields. Estimates suggest that the reductions could impact several thousand employees.
Samsung stated that it periodically adjusts the size of its global workforce to enhance efficiency and that the current cuts plan does not have specific targets. About three weeks ago, the company issued a "global mandate" to implement these reductions. In India, where Samsung employs 25,000 people, the company has already begun offering retirement packages to mid-level employees who left in recent weeks. The cuts in India could reach about 4% of the workforce. In China, Samsung has informed employees of a 30% reduction in the sales division.
There are currently no plans for layoffs in South Korea. A source with knowledge of the matter told Reuters that layoffs in South Korea would be challenging due to political sensitivities. Samsung Group, the parent company, is the largest employer in the country, and extensive cuts could lead to local unrest. Recently, Samsung faced a multi-day strike by South Korean workers demanding higher wages and improved benefits.
Samsung has faced several challenges in its key areas of business in recent quarters. According to IDC, Samsung is the largest smartphone manufacturer in the world. However, like its competitor Apple, Samsung is struggling with growth due to the success of Chinese manufacturers. This is partly due to a patriotic consumer trend favoring local brands in China.
In the second quarter of this year, Samsung’s smartphone sales grew by 0.7% year-over-year to 53.9 million units, but its market share fell from 20% to 18.9%. In contrast, Xiaomi, the third-largest manufacturer, saw a 27.4% increase in sales to 42.3 million units, boosting its market share to 14.8%. Vivo, in fifth place, experienced a 21.9% increase in sales to 25.9 million units, with a market share of 9.1%. These gains largely came at the expense of Samsung and Apple’s market shares.
In the chip sector, Samsung lags behind Taiwan’s TSMC, the world leader in foundry services (producing chips based on other companies' designs). The division faced a significant setback in May when Samsung replaced the head of the division, who previously led the division until 2017. This change occurred amid what was described as a "chip crisis" at Samsung.
Samsung is a leader in memory chips, holding a 45.5% market share. However, in the niche market for HBM3 memory chips—used in AI chip systems like those of Nvidia—Samsung trails behind South Korea's SK Hynix, which commands 90% of the market. Analysts believe Samsung missed the opportunity to capitalize on the growing demand for AI-related memory chips, thereby losing out on a lucrative and prestigious sector.
The planned cuts also reflect Samsung’s pessimistic outlook on the global economy. According to a source familiar with the details, Samsung is preparing for an economic slowdown that may reduce demand for technology products. Another source told Reuters that the company is aiming to improve its financial performance through cost-cutting measures.
