Samsung’s mobile division is on the brink of posting its first-ever annual loss, a stark turn for a unit that has consistently delivered profits since its inception. The warning comes from TM Roh, head of Samsung’s mobile experience (MX) business, who has signaled growing concern over a potential deficit driven by soaring memory costs tied to the AI boom.
The company’s semiconductor arm, meanwhile, is thriving. Samsung Semiconductor reported an estimated $38 billion (KRW 57.2 trillion) in profit for the first quarter of 2026 — more than seven times its earnings from the same period in 2025. This divergence highlights a growing internal tension: while memory demand for AI servers is surging, smartphone manufacturers are being squeezed by the same supply chain.
Global memory producers, including Samsung, are struggling to maintain pace with AI-driven demand. Even with expanded production, DRAM output in 2027 could fall 40 percent short of projected needs, according to industry projections. The only factor that might ease this gap is a sudden drop in AI investment — an outcome considered unlikely given current commitments from major tech firms.
memory prices are climbing, directly inflating the cost of smartphones. Motorola has already raised the price of its Moto G budget line by up to 50 percent, signaling that even low-end devices are no longer immune to cost pressures. Samsung has followed suit, increasing prices on its Galaxy A37 and A57 mid-range models by $50, adding $80 to the Galaxy Z Flip 7 and Z Fold 7, and raising the Galaxy Tab S11 by $100.
The company is as well shifting its memory strategy, phasing out production of older LPDDR4 and LPDDR4X chips in favor of LPDDR5 and LPDDR5X — the higher-performance, higher-cost memory now in demand by AI systems. This shift benefits Samsung’s semiconductor division but leaves its mobile unit bearing the cost. For context, NVIDIA’s upcoming AI processor, codenamed ‘Vera,’ is expected to use 1.5TB of LPDDR5X memory — 125 times more than the 12GB found in a Galaxy S26 Ultra.
Analysts note that in premium smartphones priced at $800 or more, DRAM alone could account for 20 percent of total component costs. With memory supply contracts typically set quarterly, the full impact of recent price hikes is expected to hit Samsung’s manufacturing costs by the second quarter of 2026.
For more on this story, see Apple Foldable iPhone Faces Production Delays Due to Engineering Setbacks.
Despite having the ability to prioritize its mobile division with cheaper memory allocations, Samsung appears to be favoring the immediate profitability of its semiconductor business. Internal assessments suggest the MX division may not only face a loss in 2026 but could require a recovery period afterward.
This would mark a historic shift. Samsung’s mobile business has never recorded an annual deficit since its establishment, making the prospect of a loss a significant psychological and operational turning point for the company.
How the AI boom is reshaping memory allocation inside Samsung
The internal conflict is clear: Samsung’s memory division is directing its most advanced and profitable output toward AI clients, even as its mobile division struggles with rising component costs. This isn’t a case of external shortage alone — it’s a strategic prioritization where one part of the company benefits at the expense of another. The decision to deprioritize LPDDR4 production for mobile use in favor of LPDDR5 for AI systems underscores this shift.
What the price hikes reveal about the smartphone market’s vulnerability
The fact that even budget devices like the Moto G are seeing 50 percent price increases shows how deeply the memory shortage is affecting the entire Android ecosystem. When low-cost phones — traditionally insulated from component volatility — become more expensive, it signals a structural shift. Consumers may delay upgrades, or turn to longer device lifespans, further pressuring volume-dependent manufacturers like Samsung.
This follows our earlier report, Apple to Launch First Foldable ‘iPhone Fold’ Later This Year.
Why Samsung’s internal trade-off could have lasting consequences
Choosing to feed AI demand with high-margin memory while absorbing the cost in the mobile division may boost short-term semiconductor earnings, but it risks weakening the very consumer division that has historically driven brand loyalty and volume. If the MX division posts a loss, it could trigger deeper restructuring — or force a reevaluation of how Samsung balances its integrated operations.
Has Samsung’s mobile division ever lost money before?
No. According to multiple reports, Samsung’s mobile (MX) division has historically always turned a profit and has never recorded an annual deficit since its inception.
Is the memory shortage limited to Samsung, or is it industry-wide?
It is industry-wide. Samsung, Micron, and SK Hynix are all increasing production, but even with best-case output, DRAM supply in 2027 could fall 40 percent short of demand, according to projections cited in the reports.
What role does AI play in the memory crunch?
AI systems are consuming a disproportionate share of high-bandwidth memory like LPDDR5X. For example, NVIDIA’s upcoming ‘Vera’ AI processor is expected to use 1.5TB of memory — 125 times more than a flagship smartphone — diverting supply away from mobile devices and driving up costs across the industry.
