Samsung Electronics will freeze the salary of all its employees in South Korea this year as the company struggles to improve its bottom line in an ever more competitive global smartphone market.
The salary freeze, the company’s first since 2009, won’t affect bonuses and performance-based incentives, the company said Thursday.
Samsung hopes the move will help it survive a challenging business environment. The world’s largest smartphone maker reported plunging profits throughout last year as the popularity of its premium Galaxy smartphone series lagged compared to that of low-priced Android devices from Chinese brands such as Xiaomi and Lenovo.
Samsung is making efforts to increase the attractiveness of its phones and match rivals’ features, including with its recent move to acquire LoopPay, perhaps in order to feature the company’s Magnetic Secure Transaction technology in its Galaxy S6 smartphone in the Mobile World Congress on March 1, said Lee Seung-woo, an analyst at IBK Securities in Seoul.
The outlook for Samsung’s smartphone business is brighter this year than last, as it has mostly resolved a problem with high inventory level in sales channels, but globally weak demand for handsets is worrisome as the economies of China and Europe continue to slow, Lee had said in an earlier research note from January.