Samsung Cuts Thousands of Jobs in Southeast Asia, Australia and New Zealand Amid AI Struggles

Samsung Faces Workforce Reductions in Southeast Asia and Beyond

Samsung Electronics is embarking on a significant downsizing initiative that will see job cuts in Southeast Asia, Australia, and New Zealand as part of a broader strategy to reduce its global headcount by thousands.

According to sources familiar with the situation, the layoffs could impact approximately 10% of the workforce in these regions, although the specific numbers may differ across each subsidiary.

A Samsung spokesperson emphasised that the company has not set a target number for any particular positions, noting,

“Some overseas subsidiaries are conducting routine workforce adjustments to improve operational efficiency.”

Why Are These Layoffs Happening?

The layoffs stem from ongoing challenges in the global semiconductor market.

With about 147,000 employees working abroad, constituting more than half of its total workforce of over 267,800, Samsung is restructuring to adapt to a rapidly evolving industry.

The company has chosen not to implement layoffs in its home market of South Korea, indicating a more targeted approach to the workforce reductions.

On October 1, employees in Singapore were summoned to private meetings with human resources managers and their reporting supervisors to discuss the impending retrenchments.

During these meetings, workers were informed of the details surrounding their severance packages, creating an atmosphere of uncertainty and concern.

One insider noted,

“The company aims to preserve manufacturing jobs while it cuts management and support functions.”

How Is Samsung's Market Position Affecting Decisions?

Samsung’s stock has plummeted by over 20% in 2024, as the tech giant struggles against fierce competition in memory chips and smartphones.

The company has notably fallen behind rival SK Hynix in producing high-bandwidth memory chips, essential for artificial intelligence (AI) applications, and has not made significant progress against Taiwan Semiconductor Manufacturing Co in the custom chip market.

This downturn has forced Samsung to confront the reality of its lagging position in critical technological sectors.

Executive chairman Jay Y. Lee, who was acquitted of stock manipulation charges earlier this year, now faces the formidable task of steering the company through these challenges.

His leadership comes at a time when Samsung finds itself in the unusual position of needing to catch up to SK Hynix, which leads in producing memory chips vital for training AI models.

What Changes Are Being Implemented?

In 2024, Samsung has already made moves to streamline its operations by replacing the head of its chip division.

The newly appointed chief, Mr. Jun Young-hyun, has stressed the need for a cultural transformation within the organisation.

He warned,

“We have to change our workplace culture or get caught in a ‘vicious cycle.’”

This focus on cultural change suggests that Samsung recognises the importance of not just reducing headcount but also enhancing efficiency and productivity across its operations.

Previously, the company had undertaken workforce reductions in various regions, trimming about 10% of jobs in India and parts of Latin America as it navigated the cyclical nature of the memory chip market.

The current round of layoffs is expected to be less than 10% of its total overseas staff, reflecting a cautious approach influenced by local labour regulations and financial considerations.

Internal Tensions and Union Strikes

The labour situation within Samsung has not been without turmoil.

In May 2024, the largest of the tech giant’s several unions initiated the company’s first-ever strike, signalling escalating tensions between management and employees.

This internal conflict may complicate the ongoing restructuring efforts, as the company grapples with both external market pressures and its workforce's morale.

As Samsung moves forward with these adjustments, the implications for its employees, operational efficiency, and market competitiveness will be closely watched, highlighting the critical intersection of corporate strategy and human capital in the technology sector.