It is revealed that about 5,000 layoffs in the OLED business unit, Samsung Display responded

Core Tip: According to Korean media wikileaks-kr, executives and employees of Samsung Display and Samsung Electronics' DX (device experience) divisions will be reorganized due to the slowdown in the economy, the downturn in the mobile business, and increased business uncertainty. In this regard, Samsung Display responded that the news was not true, and on the contrary, it would increase QD (quantum dot) production personnel.
According to Korean media wikileaks-kr, executives and employees of Samsung Display and Samsung Electronics' DX (device experience) divisions will be reorganized due to the slowdown in the economy, the downturn in the mobile business, and increased business uncertainty. In this regard, Samsung Display responded that the news was not true, and on the contrary, it would increase QD (quantum dot) production personnel.

According to news from related industries on the 15th, Samsung Display will promote some layoffs in various business units, and the number is expected to reach thousands, or about 5,000. This was due to lower shipments of smartphones, TVs, laptops and wearables, increased inventories and lower panel prices.

Samsung Display leverages its technological prowess to provide premium displays to manufacturers of smartphones, laptops, monitors and TVs. It is also securing super technology gaps, such as the world's first mass production of flexible OLEDs (organic light-emitting diodes) and foldable displays. In addition, Samsung Display has also announced its ambition to expand into new markets, investing a total of 13.1 trillion won in QD displays, the next generation of displays, by 2025.

Samsung Display recently announced its second-quarter revenue. The company posted 7.71 trillion won in sales and 1.6 trillion won in operating profit in the second quarter of this year. Although operating profit fell 17.2% from the same period last year, Samsung Display received compensation from Apple in the second quarter of last year, a one-time profit (if iPhone sales are not as good as expected, Apple needs to pay Samsung hundreds of billions of won in compensation), Although there is no such profit this year, it has achieved an operating profit of 1 trillion won even in the second quarter, which is called the "low season", which is a good performance.

In the first half of this year, production was significantly reduced due to disruptions in the supply of parts and components due to the lockdown of the epidemic. Samsung Display's rival LG Display posted sales of 560.73 billion won and an operating loss of 488.3 billion won in the second quarter of this year, its first loss in two years since the second quarter of 2020.

Although Samsung Display performed well in the first half of the year, there are greater risks lurking in the second half. First, Samsung Electronics' DX division was sluggish. Its DX division posted operating profit of 3.20 trillion won in the second quarter, down sharply from the 3.82 trillion won operating profit in the first quarter.

At the end of last year, Samsung Electronics set its "2022 smartphone shipment target" at 333 million units, but has now lowered its shipment target to around 200 million units. The reduction in the shipment target is also seen as reflecting the weakening of consumer confidence caused by the recent global economic uncertainty. Samsung Electronics is Samsung Display's largest customer and a subsidiary of Samsung. If Samsung Electronics reduces its purchase of display panels, Samsung Display will suffer.

Although Samsung Display exited the LCD business entirely in June, it is estimated to have accumulated about $2 billion (about 2.6 trillion won) of inventory in the second quarter alone. Earlier last year, the company sold its production line in Suzhou, China, to China Huaxing Optoelectronics, and took steps to suspend all LCD production lines and sell equipment.

In addition, the initial investment in large-size QD-display panels has a cost risk, which adversely affects Samsung Electronics' earnings. In addition, BOE, the world's largest liquid crystal display manufacturer, announced that it will start producing large-size OLEDs in 2024, and the competitive environment is very fierce. In the process of catching up with latecomers, the domestic display industry in South Korea has lost its status as the first market. According to the Korea Display Industry Association, China's display market share was 41.5% last year, significantly surpassing South Korea (33.2%).

As a result, it was reported in the office worker community last month that "Samsung is reducing the number of employees in all affiliated companies and trying to recruit new employees." It is rumored that Samsung Electronics will reduce 130,000 to 100,000 people, mainly in the wireless business. level, while Samsung Display reduced the number of employees from 50,000 to 45,000, mainly in the domestic and foreign OLED business. Rumors spread last year that Samsung Electronics sold its networking unit and voluntarily retire from its wireless unit.

A Samsung insider said, "The rumors are that they are laying off a large number of CL3 (manager/deputy manager level) and CL4 (department manager level) staff and trying to 'fix' mass recruitment. This can be explained by his saying that he will do this, It was also his willingness to hire new employees."

However, Samsung Display said it does not plan to lay off staff. The relevant person in charge of Samsung Display said, "It is supplying displays to Apple, the largest customer, and it did not suffer a major blow in the first half of the year." Regarding the layoffs caused by the withdrawal of LCD, the person in charge added, "A company laying off thousands of people is almost Impossible, the personnel in the LCD department either received training from other departments or were immediately assigned to continue their work."