Samsung has reportedly laid off three percent of employees at its US semiconductor subsidiary Device Solutions Americas (DSA). Headquartered in San Jose, California, the business unit employed around 1,200 people. More than 30 of them have been fired, Business Korea reports citing industry sources in Silicon Valley.
Samsung lays off employees amid sluggish semiconductor business
According to the Korean media, Samsung’s “unusual” layoffs are a direct result of its poor performance in the semiconductor market last year. The company’s semiconductor division hardly made any money in the year-ending quarter of 2022, with an operating profit of just over $200 million. That’s down a staggering 97 percent from the same period in 2021. It performed better in the previous quarters of 2022, but things worsened as the year progressed.
What’s worse is that the downward spiral has continued in 2023 as well. Samsung is expected to lose about $1.5 billion from the semiconductor business in the first three months of this year. It would be the first quarterly loss for the company since 2008. This is an industry-wide trend though, triggered by ongoing global economic headwinds. Demand for semiconductors, or tech products in general, has declined globally as consumers spend cautiously.
Intel, which is another big stakeholder in the semiconductor market, posted its worst financial performance in more than 50 years in the final quarter of 2022 — an operating loss of $700 million. The American chip giant doesn’t expect any improvements in the first quarter of 2023 and has already started cutting operational costs. It has fired around 340 employees and cut the salaries of the remaining employees by up to 25 percent.
Many other tech companies have also recently announced mass layoffs amid the global economic downturn. These include 18,000 job cuts by Amazon, 12,000 by Google parent Alphabet, 11,000 by Facebook (Meta), 10,000 by Microsoft, 7,000 by Disney, 6,650 by Dell, more than 6,000 by Twitter, 3,900 by IBM, and 2,000 by PayPal. Samsung is now joining this wave, although its layoffs are minuscule in front of other companies.
Samsung doesn’t plan to cut semiconductor investments
Despite the sluggish business performance, Samsung doesn’t plan to scale back its semiconductor investments this year. It reportedly invested more than $30 billion in the semiconductor business last year and wants to maintain the same level of investment in 2023 as well. The company has borrowed $16 billion from its sister firm Samsung Display to fund the planned investments. It is a long-term plan to ensure continued research and innovation so it’s ready to pounce on the increased demand when the market rebounds. That doesn’t seem to be happening anytime soon, though.
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