Samsung weighs China overhaul as pressure mounts from local rivals: analysts

Samsung unveils its latest Galaxy smartphone during a showcase in San Francisco, Feb. 25. AP-Yonhap

CHINA/HONG KONG — Samsung Electronics faces a “strategic dilemma” over whether to defend its shrinking footprint in China or redeploy resources to bolster global competitiveness, analysts say, as speculation grows that the tech giant may scale back parts of its mainland operations and double down on semiconductors.

The Korean firm was considering a broad restructuring of its China business, potentially exiting segments such as home appliances and displays while retaining smartphones and storage as core units, according to Chinese outlet Yicai.

Samsung was likely to prioritize its semiconductor operations in China, even as it pares back other business lines, according to the report, which cited anonymous industry insiders.

The company has already been weighing a partial retreat, with job cuts underway in some underperforming divisions, according to sources.

One source said Samsung could offload the distribution of home appliance sales to local partners, while retaining manufacturing operations. However, the decisions were not final and the scale of any exits remained unclear, another source said.

Samsung did not immediately respond to requests for comment.

“Samsung faces a strategic dilemma: put resources into defending market share in China or better competing against Chinese firms globally,” said Troy Stangarone, a nonresident fellow at the Carnegie Mellon Institute for Strategy and Technology.

“With intensifying competition and declining share in China’s domestic market, Samsung appears to have concluded its best strategy is to focus on global competition rather than competing head-on in China.”

The reported shift contrasts with Samsung’s strong earnings momentum, driven by surging global demand for artificial intelligence chips and infrastructure.

On April 7, the company forecast an eightfold jump in first-quarter operating profit to 57.2 trillion won ($37.8 billion), a record level that would exceed its full-year earnings for 2025.

Samsung maintains a broad presence in China spanning semiconductors, consumer electronics and home appliances, alongside research and development centers in Beijing and Nanjing focused on artificial intelligence, telecommunications and smartphones.

At the same time, it has continued to invest heavily in its chip operations in the country. The company poured 465.4 billion won into its Xi'an chip plant in 2025, up 67.5 percent from a year earlier, according to a filing with Korea’s Financial Supervisory Service.

While Samsung’s home appliance business has been “gradually losing ground in China,” the restructuring was not intended as a pivot towards semiconductors, said Lee Byung-chul, a visiting research fellow at the Sejong Institute and former Samsung executive vice president who worked at its China subsidiary for 15 years.

“It would be more accurate to say its position is shrinking further in response to the competitive environment in China.”

Samsung is increasingly up against domestic rivals that are narrowing the technology gap while benefiting from state support, lower labor costs and looser regulatory constraints, Stangarone said.

“This reflects a broader strategic challenge for Korean firms,” he added.

Ann Cao from the South China Morning Post contributed to this article.