Samsung Electronics, the world’s leading maker of smartphones, televisions, and memory chips, is set to implement significant global job cuts as it grapples with ongoing challenges in its core business sectors. According to reports, the South Korea-based conglomerate has instructed its subsidiaries worldwide to reduce their sales and marketing staff by about 15% and administrative staff by up to 30%. The job cuts, which are expected to affect divisions across the Americas, Europe, Asia, and Africa, are projected to be finalized by the end of this year.
A Global Impact
The workforce reduction plan could impact thousands of jobs, although specific numbers and details regarding which countries and business units will be most affected remain unclear. As of the end of 2023, Samsung employed approximately 267,800 people globally, with more than half, or about 147,000 employees, based overseas. The majority of these employees work in manufacturing and development, while sales and marketing staff account for around 25,100 positions, and 27,800 people work in other areas.
Sources with direct knowledge of the matter revealed that the global mandate for job cuts was communicated approximately three weeks ago. In India, for example, Samsung has already begun offering severance packages to some mid-level employees, with expectations that up to 1,000 jobs could be cut in this market alone. Samsung’s India operation employs about 25,000 people, and the region generates around $12 billion in annual revenue for the company. Additionally, reports indicate that in China, about 30% of employees at Samsung’s sales operation are expected to be affected by these cuts.
Challenges in Key Business Units
Samsung’s decision to reduce its workforce comes as the company faces mounting pressure across its key business areas. The chip industry, a major profit driver for Samsung, has been slow to recover from a severe downturn that saw the company’s profit fall to a 15-year low last year. In response, Samsung replaced the head of its semiconductor division in May as part of its efforts to address what it termed a “chip crisis.” This move was aimed at boosting its competitiveness against smaller rivals like SK Hynix, which have outpaced Samsung in supplying high-end memory chips used in artificial intelligence applications.
In the premium smartphone market, Samsung faces stiff competition from Apple and Huawei, while it continues to lag behind Taiwan Semiconductor Manufacturing Company (TSMC) in the contract chip manufacturing sector. Furthermore, a strike over wages in India has disrupted production, further compounding the challenges Samsung is currently facing in one of its key markets.
Strategic Cost-Cutting Measures
One source familiar with the job cut plans indicated that the reductions are part of Samsung’s strategy to prepare for a potential slowdown in global demand for technology products as the global economy shows signs of deceleration. Another source noted that these measures are aimed at shoring up Samsung’s bottom line by saving costs in anticipation of this anticipated downturn.
In a statement, Samsung clarified that the workforce adjustments at some of its overseas operations are routine measures aimed at improving efficiency. The company emphasized that there are no specific targets for the reductions and that the adjustments are not expected to impact its production staff.
As Samsung navigates these challenges, its strategy of trimming its workforce and focusing on core business efficiencies underscores the broader difficulties facing major tech companies amid shifting economic conditions and evolving market dynamics. The coming months will be critical as Samsung implements these changes while striving to maintain its market leadership in an increasingly competitive and uncertain global landscape.
