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Companies

Sony to slash smartphone workforce 50% by 2020

Fierce 5G competition and poor sales see company retreat from once booming sector

Sony's share of the global smartphone market stands at less than 1%.   © Reuters

TOKYO -- Sony is cutting up to half its smartphone workforce as sales shrink in the face of stiff global competition.

The job cuts come as the global smartphone industry suffers one of the severest downturns of recent years. Worldwide shipments are expected to decline for the third straight year in 2019 to about 1.3 billion units, according to U.S. research company IDC.

Sony's share of the smartphone market has fallen sharply in recent years -- from more than 3% in 2010, according to the research portal Statistica -- to less than 1% currently. It has struggled to compete against leaders Apple, Samsung Electronics and Huawei Technologies, all of which are racing to develop new 5G devices.

The decision to scale back its smartphone workforce, which could see up to 2,000 of the total 4,000 jobs cut by March 2020, is part of a move to reduce fixed costs in the business, and also includes procurement reform.

Some of the Japanese employees affected by the decision will be transferred to other divisions, but the company will offer voluntary retirement in its Europe and China operations.

Sony will limit smartphone sales in Southeast Asia and other areas to focus on Europe and East Asia.

The company's smartphone sales for fiscal 2018 are projected to come in at a dismal 6.5 million units, half the previous year's figure and just one-sixth that of five years ago.

In fiscal 2014, Sony pulled 1,000 employees from its smartphone operations, but sales have plunged faster than expected, necessitating a further round of cuts.

Sony's smartphone business generates annual revenue of about 500 billion yen, but is expected to post an operating loss for the third straight year through fiscal 2019. By halving operating expenses from fiscal 2017, the company hopes the business will turn a profit by fiscal 2020.

Sony has restructured before, selling off its personal computer unit and paring costs at its TV business. Now, its smartphone business remains the only loss-making unit.

Akihide Anzai and Wataru Suzuki

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