Samsung’s Semiconductor Division Faces Major Restructuring Amidst Shrinking Profits and Layoff Rumors
Seoul, South Korea – Samsung Electronics, the South Koreantech giant, is facing a potential major restructuring of its semiconductor business as it grapples with declining profits and growing pressure from competitors. The company’s stock price hashit its lowest point since January 6, 2024, dropping 2.32% on October 10th. The news comesshortly after Samsung announced its third-quarter earnings guidance, falling short of market expectations.
Samsung’s Device Solutions (DS) division, responsible for its semiconductor operations, is reportedly facing significant restructuring. Preliminary operating data for the third quarter revealed aprofit of approximately 9.1 trillion won, significantly lower than the anticipated 11.5 trillion won.
Jun Young-hyun, Samsung’s Vice Chairman and Head of the DS division, issued an apology statement, acknowledging the company’s underperformance and expressing concern about its technological competitiveness and future. We are facing a crisis, he stated, adding that those of us who lead the business will take responsibility.
This is the first time Samsung’s management team has publicly acknowledged the company’s struggling performance. The disappointing results have fueled rumorsof layoffs. Sources report that Samsung is considering a reduction of up to 30% of its overseas workforce in certain departments by the end of the year, impacting positions across the Americas, Europe, Asia, and Africa. The company is also reportedly seeking to cut approximately 15% of its sales and marketing personnel andup to 30% of administrative staff.
Despite being named Best Employer by Forbes for four consecutive years, Samsung has fallen to third place in the latest rankings released on October 10th. The company has yet to respond to the layoff rumors.
Meanwhile, SK Hynix, another South Korean semiconductor giant, has seen its stock price rise. On October 10th, SK Hynix shares surged 4.89%, reaching 186,700 won.
The contrasting stock performances of Samsung and SK Hynix reflect the market’s differing expectations for the two companies. Samsung has been slowerthan its competitor in adopting HBM (High Bandwidth Memory) technology, crucial for the computational demands of generative AI. While Samsung established an HBM team in July to bolster its research and development in this area, SK Hynix launched its fifth-generation HBM in March and has recently begun mass production of its 12-layer product.
Macquarie estimates that Samsung’s HBM revenue in 2026 will reach only $13 billion, a mere 43% of SK Hynix’s projected $30 billion. Samsung could lose its position as the top DRAM supplier, Macquarie stated.
Beyond thememory business, Samsung is also facing challenges in its foundry operations. The company has been struggling to secure orders for its advanced chips, particularly in the face of competition from Taiwan Semiconductor Manufacturing Company (TSMC).
Samsung’s restructuring efforts are likely to be significant, impacting its workforce, operations, and future strategy. The company’s ability to adapt and innovate will be crucial in navigating the increasingly competitive semiconductor landscape.
References:
Views: 0