Samsung’s Mobile Division Faces Historic Pressure as Memory Prices Surge
Samsung’s smartphone business is reportedly heading into one of the toughest periods in its history, as soaring DRAM and NAND flash memory prices squeeze margins across its device lineup. The pressure is so severe that the company’s mobile and network operations are now expected to post a major operating loss for fiscal 2026.
The situation is especially striking because another part of Samsung is benefiting from the same market conditions. Samsung’s semiconductor division is riding a historic boom in memory demand, driven largely by the rapid expansion of artificial intelligence infrastructure, data centers, and high-performance computing. As global demand for DRAM and NAND continues to climb, memory prices have surged, boosting profits for Samsung’s chip business.
However, that success is creating a serious challenge for Samsung’s smartphone unit. The mobile division relies heavily on memory components for its phones, tablets, and other devices. With component costs rising sharply, profitability is being squeezed at a level the division has rarely, if ever, experienced.
According to market estimates, Samsung’s Mobile Experience and Network Business division could record an operating loss of around 5.84 trillion won, or roughly $4 billion, for fiscal year 2026. If that forecast proves accurate, it would mark the first operating loss in the history of Samsung’s mobile business.
This would be a remarkable milestone for a division that managed to remain profitable even during some of its most difficult moments, including the Galaxy Note 7 crisis. That earlier event damaged consumer confidence and forced costly recalls, yet the mobile business still avoided an operating loss. The current challenge appears to be different: it is not driven by a single product failure, but by a broad and sustained increase in core component costs.
Samsung recently issued guidance for its second-quarter 2026 earnings, pointing to slightly weaker-than-expected revenue but stronger-than-expected operating profit overall. The company’s total operating profit is projected to reach about 89.4 trillion won, or approximately $58.43 billion, setting a new record and beating market expectations.
Much of that strength is believed to come from Samsung’s Device Solutions division, which oversees its semiconductor operations. The head of Samsung Electronics’ business strategy for that division reportedly expects the semiconductor business to generate more profit this year than it has earned over the past four decades combined.
The contrast between the two businesses highlights Samsung’s unusual position. On one side, it is one of the world’s leading memory chip suppliers and is benefiting from the AI-driven boom in demand. On the other side, it is one of the world’s largest smartphone makers and must absorb those higher memory costs inside its own devices.
That creates a difficult strategic problem. If Samsung raises smartphone prices to protect margins, it risks pushing more consumers toward rival brands, especially Chinese smartphone makers that compete aggressively on price. If it keeps prices stable, the mobile division may continue to absorb heavy losses.
The challenge could become even more serious in the coming years. Some projections suggest that Samsung’s mobile and network operations may face an even larger loss in 2027, potentially approaching $10 billion. Cumulative losses from 2026 through 2028 could reportedly reach around $16 billion if memory prices remain elevated and competitive pressure continues.
For consumers, this could eventually mean higher prices for future Galaxy smartphones, especially premium models that require more memory and storage. For Samsung, the priority will be finding a balance between protecting profitability and maintaining market share in a highly competitive smartphone industry.
The broader issue also reflects how artificial intelligence is reshaping the technology supply chain. AI servers and data centers are consuming massive amounts of memory, creating shortages and pushing up prices for the same components used in smartphones, laptops, and other consumer electronics. As a result, companies that sell finished devices may face growing pressure even as chipmakers enjoy record profits.
Samsung is now caught in the middle of that shift. Its semiconductor business is positioned to deliver historic earnings, while its mobile division is bracing for a historic loss. The company’s next moves on pricing, supply chain management, and product strategy could determine whether its smartphone business can recover from one of the most challenging periods it has ever faced.
