Chip costs surge, Samsung India cuts jobs

Samsung India Electronics has started reducing its workforce in stages due to challenges in its smartphone business, following a surge in memory chip prices that have nearly doubled, according to industry sources. So far, 80-100 employees from the television sets and home appliance divisions have been asked to leave, including top executives, team leads, branch managers, and area managers.

According to one source, up to 25% of Samsung's sales and marketing workforce in the electronics business could be impacted, with offroll employees hired through manpower agencies among those at risk. The smartphone team is currently spared from job cuts, as it remains Samsung's largest business in the country and any sales recovery there could significantly boost the company's overall financial performance.

Samsung's Indian electronics sales team comprises 550-600 employees, and a larger sales organization for smartphones. Employees have been receiving termination letters daily over the past few days, with Samsung offering three months' salary and an additional month's pay for every year of service as severance.

The rupee's nearly 10% decline over the fiscal year has added to Samsung's woes, making its phones and electronic products more expensive, which has affected sales growth. The Indian electronics industry as a whole has been struggling this year, with smartphone volumes declining 11-12% on-year.

Samsung has also faced difficulties expanding in the high-value air-conditioner business in India, despite intensive efforts this year. The company is consolidating its branch network, merging several offices, such as Ranchi and Patna, Delhi and Gurgaon, and Punjab and Chandigarh, leading to some job redundancies.

Despite the Galaxy Fold and Flip series receiving a positive response, Samsung has slipped to third place from second in the domestic smartphone market, with Vivo and Oppo leading. Samsung's total revenue for FY25 was Rs 1.1 lakh crore, growing 12% on-year, and its net profit grew 38% to Rs 11,287 crore. Globally, Samsung's mobile business entered an operating loss in the June quarter, and consumer electronics businesses remain under pressure amid record demand for memory chips.