Samsung Electronics, renowned globally as a leading manufacturer of smartphones, televisions, and memory chips, is reportedly undergoing substantial workforce reductions, targeting up to 30% of its staff in certain divisions worldwide. According to insider sources, these strategic changes are aimed at streamlining operations across different regions, including the Americas, Europe, Asia, and Africa.
Sources indicate that Samsung has advised its subsidiaries to reduce sales and marketing personnel by around 15%, while administrative roles may see cuts of up to 30%. This restructuring initiative is set to unfold by the end of this year, although specifics regarding the number of employees affected and which business units will face the most significant cuts remain unclear.
An official statement from Samsung described the adjustments in workforce as part of routine operations aimed at enhancing efficiency, clarifying that specific targets for these changes have not been established. Crucially, production staff will not be impacted by these job cuts. As of late 2023, Samsung employed approximately 267,800 individuals globally, with around 147,000 based outside South Korea, primarily in manufacturing and sales roles.
A recent communication, dubbed the “global mandate,” regarding these job cuts was issued about three weeks ago, giving rise to reports of severance packages being offered to employees in India, particularly at the mid-level. The anticipated layoffs in India could involve nearly 1,000 individuals out of approximately 25,000 employees in the region. Meanwhile, in China, sources have suggested that up to 30% of employees in Samsung’s sales division have already been notified of impending job losses.
The decision to reduce headcount comes in light of significant challenges faced by Samsung, particularly within its semiconductor sector. The company has struggled to rebound from a pronounced downturn that saw profits plummet to a 15-year low last year. In a bid to navigate through this “chip crisis,” Samsung has recently overhauled leadership in its semiconductor division, striving to compete more effectively against rivals such as SK Hynix, especially in the production of high-end memory chips critical for artificial intelligence applications.
Furthermore, Samsung finds itself contending with fierce competition in the premium smartphone market from tech giants like Apple and Huawei. The company also faces challenges in India where production disruptions have arisen due to a recent wage strike. These global economic pressures have prompted Samsung to brace for a potential decline in demand for tech products, leading to the ongoing workforce reductions aimed at cost-saving and safeguarding profitability.
Despite the magnitude of these changes, analysts remain uncertain about the likelihood of job cuts impacting headquarters in South Korea, where labor unrest could emerge. Samsung Group, as the country’s largest employer, is significantly entwined with the South Korean economy, making layoffs a politically sensitive issue.
Consequently, shares of Samsung Electronics—South Korea’s most valuable stock—have fallen to their lowest value in over 16 months, with market analysts adjusting profit forecasts downward amid a sluggish recovery in demand for smartphones and PCs. As the tech giant navigates these turbulent circumstances, it remains to be seen how these strategic workforce adjustments will position Samsung for recovery in the fiercely competitive global tech landscape.