Major Job Cuts Planned Across Divisions
Samsung Electronics, the global leader in smartphones, TVs, and memory chips, is set to implement significant job cuts, reducing its overseas workforce by up to 30% in certain divisions. According to sources with direct knowledge of the situation, the South Korean tech giant has issued a directive for subsidiaries around the world to cut sales and marketing staff by approximately 15% and administrative staff by up to 30%.
Impact Across Regions
The restructuring plan is expected to affect positions across the Americas, Europe, Asia, and Africa. While the exact number of job losses and the specific countries or business units impacted remain unclear, the cuts will be executed by the end of the year. Samsung’s global workforce reduction is aimed at improving operational efficiency and addressing financial pressures, though details on the number of affected employees are not yet available.
Current Workforce and Implementation
As of the end of 2023, Samsung employed approximately 267,800 people, with over half—147,000—based overseas. The latest sustainability report indicates that sales and marketing roles comprised about 25,100 positions, while 27,800 employees worked in other non-manufacturing roles.
The mandate for job cuts was distributed around three weeks ago. In India, where Samsung employs about 25,000 people, some mid-level employees have already received severance packages, with up to 1,000 positions potentially affected. In China, reports suggest that the job cuts will impact around 30% of employees at Samsung’s sales operations.
Financial Pressures and Strategic Responses
Samsung’s decision to downsize comes amidst significant financial challenges. The company’s semiconductor division, a major revenue driver, has been slow to recover from a severe industry downturn, resulting in a profit drop to a 15-year low last year. In May, Samsung replaced the head of its semiconductor division in a bid to address the ongoing “chip crisis” and compete with rivals like SK Hynix in the high-end memory chip market.
The company is also facing fierce competition in the premium smartphone sector from Apple and Huawei and has struggled to keep pace with Taiwan Semiconductor Manufacturing Company Limited (TSMC) in contract chip manufacturing. Additionally, production in India has been disrupted by a strike over wages, adding to Samsung’s operational challenges.
Challenges at Home
The prospect of job cuts may also create difficulties for Samsung in its home country of South Korea. Given Samsung Group’s status as the largest employer in South Korea and its crucial role in the national economy, significant layoffs could provoke political and social backlash. Recent labor unrest, including a strike by Samsung’s workers’ union demanding higher wages, underscores the sensitivity of employment issues within the company.
Stock Performance and Market Outlook
Samsung’s shares, which are a key indicator of South Korea’s economic health, have recently traded at their lowest level in 16 months. Analysts have adjusted their profit forecasts downward, citing a sluggish recovery in demand for smartphones and personal computers as contributing factors.
Conclusion
Samsung Electronics’ upcoming job cuts reflect a broader strategy to streamline operations and reduce costs amidst challenging global market conditions. As the company navigates these changes, it faces the dual task of improving financial performance while managing the potential impact on its workforce and corporate reputation.
I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna Sahu holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.
