YOKOHAMA: Samsung will take the radical and unpopular step of freezing its workers’ salaries in its home base, South Korea. The tech giant is rolling from tough competition against its Smartphone business and taking mauling in both the high end and low end Smartphone segments.
According to a regulatory filing as of September 30, 2014, Samsung has 99,556 employees in South Korea. It should be noted however that Samsung Elect Ltd is not making such a draconian move, as it’s not including bonuses and performance incentives in the freeze.
The company has seen slowing sales and a plunge in earnings, and even in South Korea it has been overtaken by Apple Inc. in terms of unit sales. In the lucrative Chinese market, which has now emerged as the largest Smartphone market, it has seen its high end Galaxy phone series struggle against Apple Inc.’s (NASDAQ:AAPL) flagship iPhone 6 and 6 Plus, which sport a larger screen size than their predecessors in the iPhone series. On the low end front, it now faces tough competition from local companies like Xiaomi, Huawei, and ZTE. Samsung’s Android based smart phones have lost their edge as these companies are dishing out Android phones with similar features and lower price tags, in turn eating away Samsung’s share of the market.
Samsung’s salary freeze is the first in almost six years, and the rationale given for this move is to strengthen itself against other players; since business conditions at the moment are not ideal or optimistic and will not be for some time.
The company’s earnings have dipped for the past three consecutive quarters. Meanwhile, Apple has stepped up more and tied with Samsung as the biggest Smartphone maker in the world in the fourth quarter of 2014, beating even the most bullish estimates by selling 74.5 million units.
