Samsung Electronics Plans Global Job Cuts of Up to 30% in Some Divisions
Samsung Electronics plans to reduce its overseas workforce by up to 30% in certain divisions. The restructuring initiative aims to enhance efficiency and is expected to be completed by the year-end. Specific details regarding the number of employees affected and the most impacted regions and business units remain undisclosed.
The South Korea-based tech giant has directed its global subsidiaries to trim sales and marketing personnel by approximately 15% and administrative staff by up to 30%, as disclosed by two insiders. This restructuring initiative is expected to be completed by the year-end and will affect roles across the Americas, Europe, Asia, and Africa, according to one source. Additionally, six other individuals have corroborated Samsung's intended reduction in global headcount.
The exact number of employees to be affected and the specific regions and business segments facing the most significant impact remain undisclosed.
Samsung has clarified that the workforce adjustments at its overseas entities are part of routine operations aimed at enhancing efficiency. The company emphasised that there are no predefined targets for these measures and reassured that production staff will not be affected.
As of the end of 2023, Samsung employed a total of 267,800 individuals, with over half, approximately 147,000 employees, stationed overseas, as per its latest sustainability report. The majority of these roles were in manufacturing and development, with sales and marketing staff numbering around 25,100, while 27,800 employees worked in other functions.
The directive for the job cuts was issued about three weeks ago, with Samsung's India division already offering severance packages to some mid-level employees who have departed recently. In China, the company has informed its workforce about anticipated job reductions affecting roughly 30% of its sales team, as reported by a South Korean publication earlier this month. The estimated number of employees impacted in the India unit could reach 1,000, out of Samsung's 25,000-strong workforce in the country.
Samsung has informed its employees in China about impending job cuts that are anticipated to impact approximately 30% of its workforce in the sales division, as reported by a South Korean newspaper this month. The decision comes as Samsung faces increasing pressure on its core business segments.
The tech giant's chip business, a significant revenue driver, has been slower to rebound compared to its competitors following a severe industry downturn, leading to a 15-year low in profits last year. In a strategic move in May, Samsung replaced the head of its semiconductor division to address a "chip crisis" and narrow the gap with SK Hynix in supplying high-end memory chips for AI chipsets.
In the premium smartphone sector, Samsung is encountering fierce competition from Apple and China's Huawei, while also trailing TSMC in contract chip manufacturing. Moreover, in India, a key market generating around US$12 billion in annual revenue for Samsung, production has been disrupted by a wage-related strike.
Sources familiar with the matter revealed that the job cuts are a proactive measure in anticipation of a slowdown in global tech demand amidst a decelerating global economy. Samsung is also aiming to enhance its financial performance by cutting costs.
It remains uncertain whether Samsung will implement job reductions at its headquarters in South Korea. The sensitivity of the issue in South Korea, where Samsung Group is a major employer and economic player, could pose challenges in executing layoffs domestically.
Potential job cuts may provoke labour disputes locally. Recently, a workers' union at Samsung Electronics in South Korea staged a strike for several days, advocating for improved wages and benefits. Shares of Samsung Electronics, the most valuable stock in South Korea, have dipped to a 16-month low amid analysts revising profit forecasts downwards due to sluggish demand for smartphones and PCs.
Samsung Electronics plans to reduce its overseas workforce by up to 30% in certain divisions.
The restructuring initiative aims to enhance efficiency and is expected to be completed by the year-end.
Specific details regarding the number of employees affected and the most impacted regions and business units remain undisclosed.
Source: REUTERS