Report: Samsung execs worried company could lose money on smartphones for the first time
Samsung's mobile division faces unprecedented profitability pressure in 2026 as skyrocketing DRAM and NAND costs—driven by massive AI infrastructure demand—threaten to create the company's first smartphone loss in history, despite strong sales. While Samsung's semiconductor division profits from AI's memory demands, the mobile business is forced to raise device prices substantially across all segments, signaling a structural shift in smartphone economics that will compress margins industry-wide and potentially reshape the budget phone market. This supply-demand imbalance is expected to persist through 2027, forcing technology leaders to reassess device refresh strategies and component sourcing as memory costs remain elevated across all computing segments.
Selling smartphones used to be easy—everyone wanted one, and every new phone was a lot better than the one that came before. Things are different now that smartphones are mature products. Plenty of manufacturers have thrown in the towel, leaving big players like Samsung to sell a new phone every couple of years. But even Samsung may find it tough to turn a profit in 2026 due to the ongoing race to build more AI capacity. According to Money Today (Korean), Samsung MX (mobile experience) head TM Roh has warned company leadership that it could be headed for the first net loss on smartphones in the company's history. Even during times of economic strife or amid pandemic-related supply chain chaos, Samsung still made money on smartphones. The skyrocketing price of DRAM and NAND may be what finally breaks the streak despite strong Galaxy S26 sales. Shortages of these components have affected all types of computing hardware, from consumer laptops to servers. The LPDDR5x memory found in most mobile devices is increasingly important for AI. Nvidia's Vera AI CPU, which will replace Grace later in 2026, will have up to 1.5 TB of LPDDR5x memory. The company's upcoming rack-scale AI platforms will have 36 Vera CPUs alongside 72 Rubin GPUs. The CPUs in a single server will consume enough RAM for 4,600 Galaxy S26 Ultra devices (12GB each).Read full article Comments
