Samsung Electronics is planning to cut up to 30 percent of its workforce across several divisions globally. The plan will be implemented later this year and will affect employees in the Americas, Europe, Asia and Africa. The company has instructed its subsidiaries around the world to reduce sales and marketing staff by about 15 percent and administrative staff by up to 30 percent, Reuters reported, citing sources familiar with the plan.
However, the exact number of people who will be laid off and which countries and business units will be most affected are not yet clear. By the end of 2023, Samsung’s workforce was 267,800, of which 147,000 work in offices outside South Korea.
According to the sources consulted, with this restructuring Samsung is “preparing” for a slowdown in global demand for technological products, and is also trying to shore up its bottom line through a strategy based on cost savings.
An argument that clashes with the record results obtained by the company in the second quarter of this year, with a net profit of 9.84 trillion won (about 6.6 billion euros), almost six times more (471% more year-on-year) than in the same period of the previous year, thanks to the increase in chip prices due to the rise of artificial intelligence (AI).
According to the company, these staffing adjustments are routine and are made with the aim of improving operational efficiency. In fact, some countries have already started to implement staff reductions. In India, for example, up to 1,000 jobs could be affected and some employees have started receiving their severance pay.
Meanwhile, in South Korea, where Samsung has its headquarters, the company faced an unprecedented indefinite strike this summer demanding higher wages. And this week, the company’s workers in India, where Samsung has annual revenues of around 12 billion dollars, also halted production with stoppages demanding higher wages.
Markets down
Last May, Samsung replaced the head of its semiconductor division in a bid to overcome a “chip crunch” as it looks to catch up with fellow Korean rival SK Hynix in supplying high-end memory chips used in artificial intelligence suites.
In the high-end smartphone market, Samsung faces stiff competition from Apple, China’s Huawei, while it has long lagged behind Taiwan Semiconductor Manufacturing.
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, of which the electronics giant is the crown jewel, is the country’s largest employer and plays a key role in its economy.
Shares of Samsung Electronics, South Korea’s most valuable company, are trading at their lowest level in 16 months this week as some analysts recently cut their profit estimates, citing a weak recovery in demand for smartphones and personal computers.
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