Samsung’s mobile business could see its first yearly loss in 2026 as rising memory cost driven by AI demand increase smartphone production costs.
Samsung’s mobile division is under serious financial pressure and could report its first-ever annual loss in 2026. TM Roh, who leads Samsung’s mobile experience (MX) division, has reportedly warned top management that rising memory cost are affecting smartphone profits, even though flagship phones like the Galaxy S26 series are selling well.
The main problem is the sharp rise in DRAM and NAND prices, which are widely used in Samsung memory. These increases are being driven by huge global demand from artificial intelligence systems. The same high-speed memory used in smartphones is now heavily needed for AI servers. In some cases, a single AI system uses as much memory as thousands of high-end smartphones, which is tightening supply for consumer devices.
This shortage is changing how much smartphones cost to make. Research from Counterpoint shows that by mid-2026, memory could make up more than one-third of the cost of a budget phone. In premium devices, it could still account for over 20 percent of the total cost. Earlier, processors were the most expensive part of a phone but memory has now taken that place in many models.
The supply issue is expected to continue for years. Even with production increases from Samsung, Micron, and SK Hynix, global DRAM supply may still fall short of demand by up to 40 percent through 2027. Many manufacturers are focusing more on AI-related chips because they bring higher profits, leaving less supply for smartphones and PCs.
Interestingly, Samsung’s chip business is benefiting from this situation. Samsung Semiconductor reportedly earned around $38 billion in early 2026, showing a strong contrast with its struggling mobile division.
The impact is already showing in prices. Samsung has raised prices on several products, including Galaxy A-series phones, foldables, and tablets, with hikes between $50 and $100. Other brands like Motorola have also increased prices due to similar cost pressures.
Even though Galaxy S26 sales remain strong, analysts say rising costs and tougher competition could continue to affect profits. As Business Fortune observes, with the memory shortages expected to last, smartphone makers may keep facing pressure on margins even if demand stays steady.
