Staff Fear The Chop In Samsung Electronics Annual Reshuffle

(Reuters) - Insiders say staff at Samsung Electronics have never been so anxious ahead of the annual reshuffle, as a weak smartphone performance and its worst earnings in three years are expected to cost many jobs.

As is customary for Korean businesses, Samsung is expected to announce its annual personnel changes in early December, a ritual that even in good times means weeks of distracting uncertainty for staff facing promotion, transfer or the sack.

The last of those options looks more likely after third-quarter operating profit fell by nearly two thirds.

Squeezed by Chinese rivals like Xiaomi Technology at the low end and Apple's iPhones at the top, Samsung's share of the smartphone market has also shrunk year-on-year for the last three quarters, leading to speculation that mobile business head J.K. Shin could be on the way out.

"People are very uneasy; even the senior management are asking around about what might be coming," said one Samsung employee.

Samsung declined to comment on potential changes; it often keeps the information secret even from those directly affected until a day or two before the official announcement.

The Maeil Business Newspaper, a local business daily, recently reported the company could cut 20 percent of executive positions across the board, including 30 percent from its mobile division.

This year's appointments will also offer a glimpse of how heir-apparent Jay Y. Lee plans to lead the tech giant. The younger Lee, 46, has been the de-facto decision maker as his father, Samsung Group patriarch Lee Kun-hee, remains hospitalized following a heart attack in May.

"We talk a lot about which of the senior executives will still be with us," another Samsung employee told Reuters. "What happens to them will determine how we will need to work."

Samsung Electronics, the flagship of what is by far South Korea's biggest conglomerate, or chaebol, employed nearly 290,000 people in 2013, about a third of them in the firm's home country.

While work continues, a third Samsung employee said managers and executives were distracted to the point where rank-and-file staff needed to work overtime and weekends to make sure development for major products stayed on track.

Samsung Group's decision to sell its chemical and defense arms to local conglomerate Hanwha Group has further added to the sense of anxiety.

"Everyone's just looking around to see what happens," said a fourth Samsung employee, adding that major strategic initiatives in his business unit were on hold as managers did not know who would be around to see them through.

"Only after the personnel moves are official will we all be able to get back to work," he said. "I just hope the fallout won't be huge."