Samsung to slash global workforce by up to 30%: sources

Samsung Electronics is preparing to reduce its global workforce by up to 30% in some divisions as part of a significant restructuring effort, according to sources who spoke with Reuters.

The South Korean tech giant has issued directives to its subsidiaries across several continents to implement the cuts by the end of 2024.

According to two insiders, Samsung has instructed regional offices to reduce sales and marketing staff by about 15%, while administrative staff could face reductions of up to 30%. The cuts are expected to impact regions including the Americas, Europe, Asia, and Africa.

In a statement to Reuters, Samsung said, “Workforce adjustments conducted at some overseas operations were routine, and aimed at improving efficiency.” The company clarified that production staff would not be impacted by these changes.

Samsung employed a total of 267,800 people as of the end of 2023, and more than half, or 147,000 employees, are based overseas, according to its latest sustainability report cited by Reuters.

Back in April, the company ordered a six-day work week for its executives to come up with plans to adapt to economic uncertainty.

Restructuring amid industry challenges

Samsung’s decision to trim its workforce comes as it faces mounting challenges across its key business areas. The company’s semiconductor division has struggled to recover from a global downturn in the chip industry, which resulted in a 15-year low in profits for Samsung last year, said Reuters.

Shares in Samsung Electronics, South Korea’s most valuable listed company, hit a 16-month low on Wednesday. Analysts have also lowered their profit estimates for the company, citing weak recovery in global demand for smartphones and personal computers.

Samsung also faces fierce competition in the premium smartphone market, with rivals such as Apple and Huawei steadily eroding its market share, said the Reuters report. In India, a critical market that generates around $12 billion annually for Samsung, a strike over wages has disrupted production.

One source familiar with the restructuring told Reuters that the job cuts are being made to prepare for a slowdown in global demand for technology products, as economic conditions worldwide continue to weaken. Another source cited cost-saving measures as a key factor behind the move.

Some of the earliest impacts of these job cuts have been felt in India, where mid-level employees have been offered severance packages in recent weeks, said Reuters. A source revealed that as many as 1,000 jobs could be eliminated in Samsung’s India division, which currently employs about 25,000 people.

Political sensitivities in South Korea

While the job cuts are expected to have a global reach, Samsung may face obstacles in reducing its workforce in its home country of South Korea, said Reuters, as the company, a crown jewel of the Samsung Group conglomerate, plays a vital role in the country’s economy and is its largest private employer.

Any large-scale layoffs in South Korea could stir political backlash, as job cuts are a sensitive issue for the government and public, said the report. Samsung Electronics recently faced a labor strike from a union demanding higher wages and better benefits, signaling the potential for further unrest if layoffs are pursued domestically.