Samsung Electronics Sheds Thousands of Jobs

11-18-2007 17:31
By Kim Yoo-chul
Staff Reporter

Samsung Electronics, the world’s largest memory chipmaker, has cut more than 1,600 jobs in a large-scale restructuring move unseen since 2002, to take the brunt for weak prices of chips and flat-panels for televisions.
According to Samsung Electronics’ data submitted to the Financial Supervisory Service, the nation’s financial watchdog, the number of workers marked 85,269 as the end of Sept., down 1,630 from the 86,899 as of March this year. The number of high-ranking officials also declined by 15 to 821 over the same period.
Previously, Samsung had cut hundreds of employees in the third quarter of 2002 from six months earlier, according to Samsung officials.
``The job cuts were a reflection of Samsung Electronics’ steady restructuring efforts to find next drivers for the company in the future,’’ a Samsung spokesperson told The Korea Times, Sunday.
Asked about the possibility of further cuts, the official declined to elaborate.
In August, Samsung announced a series of restructuring measures including voluntary retirement by executives and unit merges after the operating profit in the second quarter sank below 1 trillion won for the first time in five years.
Market observers said the latest large-scale job cuts have widely been expected as the operating margin for the company plunged 27 percent in the first quarter from a year ago due to disappointing performances in its key business sectors such as semiconductor and flat-panel divisions.

Samsung’s semiconductor division contributed to more than 70 percent of the company’s operating profit in 2006.
Even further, shares of Samsung Electronics, which had peaked at 687,000 won in July, have fallen near 20 percent over the past few months, closing at 557,000 won last Friday.
Industry analysts, however, said more job cuts are seen considering the bearish market situation in the global chip sector, and the ongoing moves to find new growth engines escaping from the semiconductor business.

Analysts expect the prices of dynamic random access memory (DRAM) chips used in personal PCs, to fall a maximum of 20 percent by the first quarter of 2008. Samsung is set to invest 6.19 trillion won in the memory chip sector of the whole semiconductor business in 2007, according to the company.
DRAM prices plunged over 90 percent to $1.03 in the spot market as of Nov. 14 from early January this year, mounting burden to the company, which is taking up 28.3 percent in the global DRAM industry in the second quarter. Samsung is diversifying its business strategies to the profitable over-one-gigabyte NAND, Non-memory chips, LCD TVs, handsets to business-to-business sectors.
``More job cuts are expected as restructuring measures by the company were in line with raising return on equity to investors,’’ an unnamed fund manager said.
yckim@koreatimes.co.kr