Samsung’s India Woes: A Cautionary Tale for a Slowing Market

Samsung India’s decision to lay off 80-100 executives in its television and home appliance businesses is a stark reminder of the challenges facing the country’s electronics industry. The move, following a more than twofold increase in memory chip prices, has sent shockwaves through the sector.

The rise of smartphones has driven growth in India’s consumer electronics market, but sales volumes have fallen 11-12% year-on-year, according to industry estimates. Mobile phones contribute around three-fourths of Samsung India’s local revenue, making this a concerning development for the company.

The impact on Samsung’s consumer electronics business has been exacerbated by the rupee’s nearly 10% decline through FY26. The weaker currency has pushed up prices for electronic products, putting pressure on sales growth. This is not an isolated issue – sales and margin growth across the wider Indian electronics industry are also being affected this year.

Samsung lacks a semiconductor business in India, unlike companies like Taiwan Semiconductor Manufacturing Company (TSMC), which have invested heavily in the country to take advantage of its growing tech ecosystem and skilled workforce. This gap in capabilities has undoubtedly contributed to Samsung’s struggles.

Samsung’s smartphone division has been spared from layoffs for now, but it remains to be seen whether this will be enough to stem the tide. The company’s latest super-premium smartphones have received a positive response, although phones priced at Rs 1 lakh and above account for only 4% of the overall market by volume.

Industry watchers point to aggressive promotions across several key models as a factor in Samsung’s decline. This raises questions about the long-term sustainability of such strategies and whether they will ultimately benefit consumers or simply mask deeper structural issues within the industry.

The impact on Samsung’s workforce is another concern. The company has offered severance packages, including three months’ salary and an additional month’s pay for every year of service. However, this may not be enough to cushion the blow for those who have been laid off. As one executive noted, there will be no immediate job cuts in the mobile phone business.

Looking ahead, Samsung’s decision to push back a proposed merger of its home appliance and television sales teams until December quarter is a sign that the company is taking steps to cut costs and reduce management layers. However, this may not address the underlying issues facing the sector.

In recent years, India has faced economic challenges, including a sharp 40% decline in consumer footfall due to repeated price hikes. Samsung’s decision to raise prices on some smartphone models by 5-10% is a move that may ultimately backfire. While it may provide temporary relief for the company’s bottom line, it risks exacerbating the very issues driving consumer behavior away from its products.

Repeated price hikes have already led to a sharp decline in consumer footfall – a trend unlikely to reverse anytime soon. Ultimately, Samsung India’s struggles serve as a reminder of the importance of innovation and adaptability in a rapidly changing market. The company must look beyond short-term fixes and address the fundamental drivers of growth within its sector if it hopes to regain its footing in India.