Sony to slash staff: Will halve smartphone business staff by March next year

Another tech giant is laying off employees!

According to Japan's Nikkei, Sony will cut half of its 4,000 employees in its smartphone business and halve procurement and fixed costs by March 2020. Some employees in Japan will be reassigned, while employees in Europe and China will be laid off directly.

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A Sony spokesman said the company will also close its smartphone factory in Beijing to cut costs in an effort to make the loss-making mobile phone business profitable from next year.

Reuters quoted unnamed people as saying that after the closure, Sony will only produce smartphones at one factory in Thailand, but will continue to outsource some production to contract manufacturers.

It is worth noting that this business is one of Sony's few weaknesses. In the fiscal year ending this month, Sony's smartphone business will face a loss of 95 billion yen (about 5.8 billion yuan).

Some analysts say Sony should sell its smartphone business given fierce price competition with Asian rivals. The company has less than 1% global market share and shipped just 6.5 million phones to Japan and Europe this fiscal year.

Not only that, the era of "Uncle" is really coming to an end. On Thursday, March 28, a statement released on Sony's official website showed that the current chairman, Kazuo Hirai, who is affectionately called "Uncle" by Chinese fans, will officially retire on June 18, but at the request of the management team, he will serve as a senior consultant to the company thereafter.

After taking office, he vowed to lay off 10,000 employees to cut costs and boldly sold the underperforming VAIO personal computer business. It was by cutting investments in smartphones and TVs that Sony's financial situation began to improve step by step, and it achieved a small profit in fiscal 2014, and its net profit has steadily increased since then. In fiscal 2017, thanks to the strong performance of its gaming and network businesses, Sony achieved an operating profit of 734.9 billion yen, setting a record high in the company's history.

Despite the impressive performance of the gaming and imaging divisions, Hirai has not been able to reverse the decline of the mobile business during his tenure. In the fourth quarter of last year, Sony's mobile division lost 15.5 billion yen, and has not made a profit for four consecutive quarters.

Lu Renbo, deputy secretary general of the China Electronic Commerce Association, said earlier that Sony is indeed facing a transformation problem in the face of losses and needs to make adjustments in its operations. On the one hand, Sony needs to further improve its traditional electronics industry; on the other hand, it needs to adjust its business and increase investment in the end-of-line industry chain.