"Direct Sales Hit Since 2020"...Samsung Appliances Moves Toward Restructuring [Why&Next]

Samsung Appliances and China Subsidiary: A Decade of Performance
Closure of Appliance Production Lines, Shift to Outsourcing
China Business Restructuring Finalized, Discontinuation of Home Appliance Sales
Home Appliance Profitability Declin

With Chinese home appliance manufacturers mounting an aggressive attack, the burden of U.S. tariffs, and the aftereffects of the Middle East war, a sense of crisis is escalating within Korea’s home appliance industry. As the decline in profitability becomes structurally entrenched, Samsung Electronics has responded with a major move to reorganize its domestic and overseas business structure. The company is carrying out comprehensive cost-cutting measures, including winding down certain domestic production lines, halting sales of home appliances and TVs in China where its competitiveness has weakened, and restructuring its workforce.

Yonhap News Agency

According to the home appliance industry on April 29, the Digital Appliances (DA) division, which oversees Samsung Electronics’ home appliance business, recently held a management briefing for employees and announced its plan to restructure its business operations. The plan includes shutting down certain production lines for home appliances such as dishwashers and microwave ovens and shifting to outsourcing production. It was also decided to close the Malaysia factory, which had served as a key overseas production base for 37 years since its establishment in 1989.

At the same time, the company is pushing forward with a reorganization of its overseas operations. Samsung Electronics plans to finalize its restructuring plan for the Chinese business this week and announce it to local business sites and partners in China. The key point is that the company will halt sales of home appliances and TV products in China within the year and instead focus on high-tech sectors such as mobile devices, semiconductors, and medical equipment. However, the home appliance factory in Suzhou will be maintained as an export production base.

Powerless Against Chinese Onslaught: The Background Behind Korean Home Appliance Reorganization

The reason behind Samsung Electronics’ large-scale restructuring is the continued deterioration of profitability in its home appliance business. In recent years, Chinese home appliance firms have rapidly expanded, dominating the low-priced product market with overwhelming price competitiveness. They have also penetrated premium segments such as OLED TVs and AI-powered appliances, threatening the standing of Korean companies.

Since the early 2010s, Chinese home appliance manufacturers have grown rapidly on the back of government subsidies and an expanding domestic market, increasing their presence in the global market. Major players such as Haier, Hisense, and TCL captured emerging markets quickly through aggressive low-price strategies, and from the mid-to-late 2010s, strengthened their technological and brand competitiveness, making a full-fledged entry into the premium market. As a result, Korean companies, which had shown strength in TVs and home appliances, faced intensified price competition and pressure on market share. The industry views 2017–2018 as the turning point when Chinese companies emerged as real competitors and began to pose a significant threat to Korea’s home appliance sector.

In fact, the profitability of the Device eXperience (DX) division, which includes the DA division, has been on a downward trend since the 2020s. This marked the point when the profitability impact from the onslaught of Chinese companies became apparent. Analysis of Samsung Electronics’ annual business reports over the past 10 years shows that the operating margin of the DX division entered the single digits at 7% in 2022 and continued to decline to 8.46% (2023), 7.11% (2024), and 6.84% (2025). Although sales increased thanks to the success of flagship products like the Galaxy S25, intense competition with Chinese firms, rising raw material prices due to the Iran war, and higher memory prices all contributed to a decline in actual profitability.

Looking at the recent sales trends of SCIC, the Chinese sales subsidiary for set products, further reveals the background for the restructuring. Ten years ago, in 2015, the subsidiary’s sales reached 11.5 trillion won, followed by 8.8 trillion won in 2016. However, sales have steadily decreased, falling to the 2 trillion won range since 2020.

When asked about rumors of a withdrawal from the Chinese business, Yong Seokwoo, President and Head of the Visual Display (VD) division at Samsung Electronics, stated at "The First Look Seoul 2026" event on April 15, "It is true that business in China is difficult." In addition, the ongoing uncertainty of U.S. tariff policies since last year and the surge in raw material prices due to the Iran war are further squeezing the company’s profit structure.

Samsung and LG Shift to Emergency Management with Restructuring

As the crisis deepens, signs of workforce restructuring are now emerging in the home appliance business units. According to industry sources, the DX division at Samsung Electronics has recently conducted a voluntary retirement program for selected employees. Managers born before 1971 are reportedly the main targets, and those opting for voluntary retirement are expected to receive compensation amounting to several hundred million won. Regarding this, Samsung Electronics explained, "While we used to conduct company-wide voluntary retirement programs in the past, recently, we have been accepting retirement requests from senior employees on an ongoing basis."

Despite reporting record-breaking preliminary results in the first quarter, Samsung Electronics saw most of its performance driven by the Device Solutions (DS) division, while the operating profit of the DX division, which had reached the 4 trillion won range in the first quarter of last year, is expected to fall to around 2 trillion won. As a result, the company is maintaining or even strengthening its emergency management stance in preparation for the following quarters. Since last month, the DX division has implemented austerity measures, starting with reducing overseas business trip expenses such as executive airfare.

With the prolonged Iran war and growing tariff burdens, LG Electronics has also shifted to emergency management. The company has cut expenses for executives and organizational leaders by half compared to before and is requiring economy class instead of business class for air travel as part of intensified cost control. However, LG Electronics plans to maintain its business infrastructure in China and target the remaining premium demand through high-end, high-quality product lines.

The pressure for restructuring across the home appliance industry is expected to persist for the time being. According to an industry insider, "Samsung Electronics appears to be gradually downsizing its entire home appliance division and is on track to virtually exit the business. With Chinese firms having seized the initiative from TVs to panels, it is not a bad strategy for the company to focus selectively on profitable areas."

This content was produced with the assistance of AI translation services.