Date of Report: October 3, 2024
Broker Name: Lim & Tan Securities Pte Ltd
Workforce Reductions in Southeast Asia, Australia, and New Zealand
Samsung Electronics has initiated layoffs across Southeast Asia, Australia, and New Zealand, as part of a global workforce reduction plan aimed at cutting thousands of jobs. According to sources familiar with the situation, the layoffs could affect approximately 10% of the workforce in these markets, although the exact numbers for each subsidiary may vary. Other overseas subsidiaries are expected to see similar cuts, with reductions potentially reaching 10% in some locations.
The cuts are part of Samsung’s efforts to improve operational efficiency, and while the company has not set specific targets for job reductions, management and support functions are expected to bear the brunt of the downsizing. Manufacturing jobs are likely to be preserved as part of this strategy.
Impact on Global Workforce
Samsung employs over 267,800 people worldwide, with about 147,000 staff based overseas. These reductions mark a significant move by the company to streamline its operations amid ongoing challenges. Although Samsung has faced similar workforce reductions in the past, the latest layoffs reflect an intensifying competitive landscape and the company’s need to remain agile in a cyclical market.
In Singapore, employees were called into private meetings with HR and management to be informed about the retrenchments and severance packages. These adjustments are described as routine workforce adjustments by a company spokesperson.
Challenges in the Memory Chip Market
Samsung’s share price has declined more than 20% in 2024, reflecting the challenges it faces in key markets. The company has been struggling, particularly in the memory chip sector, where it has lost ground to rival SK Hynix Inc. Samsung has lagged behind in the production of high-bandwidth memory chips used in artificial intelligence (AI) applications, such as Nvidia Corp.’s AI accelerators.
Additionally, Samsung has been unable to keep pace with Taiwan Semiconductor Manufacturing Co. in the production of custom-made chips for outside customers. These market setbacks have led to significant changes in leadership within Samsung’s chip business. Earlier in 2024, the company abruptly replaced the head of its semiconductor division, with the newly appointed chief, Jun Young-hyun, warning that Samsung needed to overhaul its workplace culture to avoid falling into a “vicious cycle.”
Executive Leadership and Future Outlook
Samsung’s leadership challenges have been compounded by legal troubles. Executive Chairman Jay Y. Lee, the grandson of Samsung’s founder, was acquitted of stock manipulation charges in February 2024. Lee now faces the daunting task of navigating Samsung through its current difficulties, particularly in the highly competitive memory chip market.
Samsung has a history of navigating through cyclical downturns in the memory chip industry, but the current competitive pressures require swift and strategic responses to maintain its leadership position in the technology sector.
Layoffs in Other Markets
In addition to the layoffs in Southeast Asia, Australia, and New Zealand, Samsung has reduced its workforce by about 10% in India and parts of Latin America. The company’s latest push to reduce its global headcount will affect less than 10% of its overseas staff, and the exact numbers will be influenced by local labor regulations and financial considerations.
The focus of these layoffs will be on management and support roles, while manufacturing jobs are likely to be safeguarded. Despite these challenges, Samsung continues to aim for efficiency and competitiveness in a rapidly changing market environment.
