Samsung spends large amounts of money on research and development (or R&D), and even in the face of disappointing sales last year still invested more in R&D than ever before, coming in second globally for its spending with an R&D budget of $14.1 billion while also leading the pack in semiconductor spending (though still less than it spent in 2014; Samsung maintained third place from 2014 but didn’t grow). Samsung even added new R&D projects to its already over 160 projects mid-year last year. Yet and still, the Korean giant has said that it has a tough road ahead in 2016 in the smartphone market, and announced its structural reorganization for 2016 in January. It’s eight weeks later, but we’re starting to get some insight on just how big of a structural reorganization Samsung has made to wade this competitive year in the market.
According to a new report out of Korea, Samsung has decreased its workforce between the end of 2015 and now by 2,480 personnel at the company’s headquarters, dropping from 99,382 employees down to 96,902 employees. In addition to employees, Samsung has also reduced its R&D centers, eliminating 3 of its 44 R&D centers last year (from 44 down to 41) and shutting down the electronic materials research and information application research centers in the US. Other divisions of the company, are also seeing employee reductions. To exacerbate the financial situation, the Korean giant has also reduced its R&D costs for the first time since 1998, the publication says, hinting to more than just employee streamlining.
Samsung’s reason behind the structural reorganization is to provide a pre-emptive strike to what could be a rough year financially and wade it as best it can. At the same time, however, Samsung has been doing everything it can to provide a positive spin on this difficult financial weather: the mobile division has been working to boost its component profit, having placed its own Exynos 7420 processor in all worldwide variants of the Galaxy S6, S6 edge, Galaxy S6 edge+, and the Galaxy Note 5 to reduce patent royalties between 2.5 to 5 percent. Samsung is now the fourth largest smartphone processor maker in the world behind the likes of Qualcomm and Apple.
Outside of the smartphone, components, and TV market, the Korean giant has also begun investing in virtual reality, producing its own virtual reality headset, Gear VR, for average consumers (with a goal to win enterprise professionals as VR users, too) while also investing in VR startups such as Baobab Studios and creating VR partnerships with global hotel chain Marriott, the International Olympic Committee for the 2016 Youth Olympic Games, Six Flags for virtual reality roller coasters, and AT&T, with the possibility that Samsung may expand VR beyond smartphones. Samsung also has automobile ambitions, with the company having created its own autonomous vehicle team, partnered with SEAT and SAP for connected car projects, BMW for smart brains to implement in autonomous vehicles, and Panasonic to produce a smart vehicle assistant for the same.
Overseas business is looking up as well, with Samsung having acquired 8 new subsidiaries in 2015 (for a total of 159), some based in the US. Samsung’s found a new chapter in its own homegrown mobile operating system, Tizen, with over 3 million Tizen-powered smartphones sold last year. Samsung’s newest high-end Android-powered smartphones, the Galaxy S7 and Galaxy S7 edge, have surpassed the company’s expectations. As for the TV sector, Samsung’s Tizen-powered TVs are in high demand – and Samsung’s TV market share is leaving its competitors in the dust.
Samsung is no stranger to structural reorganizations: the company restructured its India team last year as part of its global agenda, and has an annual restructuring employee program as part of its commitment to Korean business tradition.
