Poor Performance Shift
The JoongAng Daily reported on Nov. 22 that Samsung Electronics is going to reduce the size of its IT and Mobile Communications (IM) Division in the wake of its poor business performance recorded in the third quarter of this year, when the operating profits of its Device Solutions (DS) Division exceeded those of the IM Division.
“The company is planning to transfer at least 30 percent of the Mobile Communications employees in the IM Division to other business units, while simplifying the top management of the division that has no less than seven president-level executives,” it said. At present, approximately 80 percent of the 28,000 or so IM Division employees work for the Mobile Communications unit. As such, about 6,000 of them are expected to be relocated, which is the largest reorganization since the establishment of the IM Division in late 2012.
The IM Division of Samsung Electronics had recorded 6.7 trillion won (US$6.0 billion) in operating profits in the third quarter of last year. However, the amount plummeted to 1.75 trillion won (US$1.57 billion) a year later. Meanwhile, the business profits of the DS Division reached 2.03 trillion won (US$1.82 billion), surpassing those of the IM Division for the first time since 2011.
This is because the focus of the global smartphone market is shifting to mass-market handsets that Chinese and Indian manufacturers are good at. Besides, Samsung Electronics has had a hard time competing with Apple in the high-end market. Samsung Electronics’ global smartphone market share was 24.7 percent in the third quarter of 2014, dipping below the 25 percent mark for the first time since 2012. The PR department from Samsung Electronics said, “We have to wait for the personnel appointment announcement at the end of the year. Until then, there is nothing to say about this matter.”