In addition to job cuts, Samsung has halted all new hiring and is not replacing executives who have left the company voluntarily. The company is also considering reducing the number of off-roll employees. Employees affected by the layoffs will receive severance packages that include three months’ salary and an additional month’s pay for every year of service.

These workforce reductions are occurring alongside significant operational disruptions. Workers at Samsung’s Chennai manufacturing plant have been on an indefinite strike for three days, severely impacting the production of key products such as televisions, refrigerators, and washing machines. The strike is particularly problematic given the upcoming festive season, with production currently running at only 50-80% of its full capacity.

Samsung’s financial troubles are compounded by fierce competition from rivals like Xiaomi and Vivo. The company has experienced a sharp decline in smartphone shipments, falling to third place in market volume during the April-June quarter of 2024. This drop in shipments, which decreased by 15.4% during this period, has resulted in a decline in both volume and value market shares. The company’s value market share dropped to 16% from 23% in the previous quarter and 21% a year earlier.

Moreover, Samsung has struggled with unresolved issues with offline retailers, including pricing discrepancies and inventory shortages, which have led to an inventory build-up ahead of the festive season. The All-India Mobile Retailer Association (AIMRA) has criticized the company for inconsistent pricing and inadequate sales support, further complicating its market position. The layoffs have also led to a surge in job applications from former Samsung executives seeking new opportunities, with some even willing to accept lower salaries.