Samsung India pays the price of costlier chips with a round of layoffs

Kolkata: Samsung India Electronics has begun cutting jobs in batches as sales and margins have come under pressure in its mainstay smartphone business, after memory chip prices more than doubled, multiple industry executives told ET on the condition of anonymity. So far, 80-100 executives in the television sets and home appliance businesses have been asked to go, they said.

The layoffs include director-level officials and team leads at the headquarters, along with branch and area managers at operating branches, said the people.

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“Up to 25% of its sales and marketing workforce in the electronics business — including offroll employees hired through manpower agencies — could be affected,” said one of the executives cited earlier.

Smartphone team safe for now

The absence of a local semiconductor business, which has made Samsung one of only three Asian stocks with a trillion-dollar market capitalisation, is seen to be hurting the India unit’s performance and manpower prospects. The smartphone team is insulated from the job cuts, as of now, as it is Samsung’s largest business locally, and a sales rebound there can dramatically improve the overall India financial performance.

The domestic electronics sales team has 550-600 executives, apart from a larger sales organisation for smartphones. An affected employee told ET that Samsung has been issuing termination letters daily over the past few days in small batches and asking employees to leave without serving their notice periods.

The company is offering three months’ salary and an additional month’s pay for every year of service as severance. Samsung India did not respond to an email seeking comment. Samsung’s problems have been compounded by the rupee’s nearly 10% decline through FY26, although the currency remained largely steady through this fiscal year after a May trough. Its phones and most electronic products have become expensive, crimping sales growth. Sales and margin growth in the broader Indian electronic industry is affected this year. Smartphone volumes in the country have declined 11-12% on-year, according to industry estimates.

Mobile phones make up three-fourths of Samsung’s local revenue. Furthermore, the South Korean major has been unable to expand in the high-value air-conditioner business in India, despite aggressive efforts this year. That has also put pressure on the consumer electronics business, where raw material prices have spiked. Samsung is simultaneously consolidating its branch network to reduce costs, with several offices being merged. For instance, Ranchi and Patna, Delhi and Gurgaon, and Punjab and Chandigarh are being combined, resulting in some positions becoming redundant, the executives said.

The company’s latest super-premium smartphones – Galaxy Fold and Flip series –have received good response even though the overall market for Rs 1 lakh and above smartphones is 4% by volume. According to latest data by market tracker Counterpoint Research, Samsung slipped to the third position — from number 2 — in April-June in the domestic smartphone market, with Vivo leading and Oppo in the second spot in a neck and neck fight.

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The researcher said the company has been running aggressive promotions across key models. Samsung India’s total revenue stood at Rs 1.1 lakh crore in FY25, growing 12% on-year, according to the latest filings with the Registrar of Companies. Home appliances account for 11% of sales, being the second-largest category after phones. Its FY25 net profit stood at Rs 11,287 crore, a growth of 38% from the previous fiscal year. Financials for FY26 are not yet available. Globally, Samsung’s mobile business swung into an operating loss in the June quarter, while its consumer electronics businesses also remained under pressure, even as record demand for memory chips drove a sharp increase in semiconductor profits.

“There’s manpower rationalisation in the home appliance and television businesses. The second round can happen after Diwali,” said one of the executives cited earlier. “There will be no immediate job cuts in the mobile phone business as this is its bread and butter and the company expects a rebound in sales during Diwali. However, it might get evaluated later.” Samsung on Monday raised prices of some smartphone models by 5-10%, its third price increase this month.

The All India Mobile Retailers’ Association has said consumer footfall has fallen sharply by 40% due to repeated price increases. Samsung India has also postponed a proposed merger of its home appliance and television sales teams to the December quarter, a move expected to further reduce costs and management layers, as per industry executives. One executive, however, said the proposed merger has been deferred.