South Korea’s Samsung denied reports it will reduce headcount by 10 per cent at its headquarters but said it will freeze salaries this year.
A Samsung representative said a portion of its workers will be relocated, but no job cuts are expected at its headquarters for the time being, Yonhap News reported. The salary freeze will be the first since 2009.
The Korea Economic Times, citing industry sources, reported yesterday the company started downsizing its back-office operations, which included finance, personnel and public relations. The company said it saved about KRW1.8 trillion ($1.52 billion) in selling and administrative expenses in the first half by not spending already-planned budget items.
The smartphone giant, which has been losing market share to low-cost rivals such as Huawei and Xiaomi, confirmed in late July it faced a tough second quarter, acknowledging that sales of its flagship Galaxy S6 line had been “below expectations”.
The operating profit of its IT & mobile unit fell 38 per cent year-on-year to KRW2.76 trillion ($2.35 billion), on revenue of KRW26.06 trillion, down 8.4 per cent. It was the seventh straight quarter of falling year-on-year profits.
Its share of the global smartphone market fell 4.3 points to 21.9 per cent in Q2 from a year ago, as worldwide sales rose 13.5 per cent year-on-year, representing the slowest quarterly growth since 2013, according to Gartner.
Samsung isn’t the only handset vendor to struggle as prices fall and competition intensifies. Last month Lenovo announced it will cut 3,200 jobs, around 5 per cent of its total, while HTC said it expects to cut 15 per cent of its staff. HTC also is looking to reduce its operating expenditure by 35 per cent, to get back into the black after several periods of losses.