Samsung Electronics plans global job cuts of up to 30% in some divisions

Samsung Electronics (005930.KS), opens new tab, the world’s largest maker of smartphones, TVs and memory chips, is cutting up to 30% of its overseas staff in some divisions, three sources with direct knowledge of the matter told Reuters.

South Korea-based Samsung has instructed its subsidiaries around the world to cut sales and marketing staff by about 15 percent and administrative staff by up to 30 percent, two of the sources said.

The plan will be implemented by the end of this year and will affect jobs in the Americas, Europe, Asia and Africa, one person said. Six other people familiar with the matter also confirmed Samsung’s planned job cuts globally.

It is not clear how many people would be laid off or which countries and business units would be most affected.

The sources declined to be identified because the scope and details of the job cuts remain confidential.

In a statement, Samsung said the staffing adjustments made at some overseas operations were routine and aimed at improving efficiency. It added that there were no specific targets for the plans and that they were not affecting its production staff.

Samsung employed a total of 267,800 people as of the end of 2023, with more than half, or 147,000 employees, working overseas, according to its latest sustainability report.

Manufacturing and development accounted for the bulk of those jobs, and sales and marketing staff numbered about 25,100, while 27,800 people worked in other areas, the report said.

The “global mandate” on job cuts was sent out about three weeks ago, and Samsung’s India operation was already offering severance packages to some mid-level employees who left in recent weeks, one of the direct sources said.

The total number of employees who may have to leave the Indian unit could reach 1,000, the source added. Samsung employs about 25,000 people in India.

In China, Samsung has notified its staff of job cuts expected to affect around 30% of its employees in its sales operations, a South Korean newspaper reported this month.

GREAT CHALLENGES
The job cuts come as Samsung faces increasing pressure on its key units.

Its crisps business, the main product in its supply chain, has been slower than rivals to recover from a severe industry downturn that sent profits to a 15-year low last year.

In May, Samsung replaced the head of its semiconductor division in a bid to overcome a “chip crunch” as it seeks to catch up with smaller rival SK Hynix (000660.KS), opens new tab, in supplying high-end memory chips used in artificial intelligence chipsets.

In the high-end smartphone market, Samsung faces stiff competition from Apple (AAPL.O), opens a new tab and China’s Huawei (HWT.UL), while it has long lagged behind TSMC (2330.TW), opens a new tab in contract chip manufacturing. And in India, where Samsung rakes in about $12 billion in annual revenue, a strike over wages is disrupting production.

One of the sources familiar with the plans said the job cuts were being made in preparation for a slowdown in global demand for technology products as the world economy slows. Another source said Samsung is seeking to shore up its bottom line by cutting costs.

It was not immediately clear whether Samsung would also cut jobs at its headquarters in South Korea.

One of the sources said Samsung would find it difficult to lay off workers in South Korea because it is a politically sensitive issue. Samsung Group (SAGR.UL), of which the electronics giant is the crown jewel, is the country’s biggest employer and plays a key role in its economy.

Job cuts could also spark labor unrest in the country. A union of Samsung Electronics workers in South Korea recently went on strike for several days to demand higher wages and benefits.

Shares of Samsung Electronics, South Korea’s most valuable stock, are trading at their lowest level in 16 months on Wednesday as some analysts recently cut their profit estimates for the company, citing a weak recovery in demand for smartphones and personal computers.