While announcing its financial results for the second quarter of 2026, Samsung reported an operating loss for the first time in the history of its mobile division. The company stated that despite the sales performance of the Galaxy S26 series meeting expectations and the continued demand for the Galaxy A series, increasing production costs negatively affected profitability. In particular, the rise in memory and other key component prices had a direct impact on the financial results of the mobile business. Thus, Samsung, one of the world’s largest smartphone manufacturers, officially confirmed that it could not escape the cost pressure felt throughout the industry recently.
According to the financial report published by Samsung, the Mobile eXperience (MX) unit achieved annual revenue increase. The company stated that the basis of this growth is the strong sales performance of the flagship models of the Galaxy S26 series and the Galaxy A series. However, operating profit declined due to rising component costs across the industry. In its statement, Samsung emphasized that increasing component costs put serious pressure on operational results. The price increases in the global memory market in recent months stand out as one of the most important reasons for this situation.
The rise in memory prices affected Samsung’s profitability
Samsung’s Device eXperience (DX) division covers television and white goods activities as well as smartphones. The company announced that this division posted a total operating loss of 800 billion won, or approximately US$550 million, in the second quarter. Although television and home electronics products also had a share in the financial results, it is stated that the mobile business line was the determining factor in the loss.
News from industry sources in recent months also pointed to this development. In various reports published in March and April, it was claimed that Samsung management was evaluating the impact of rising DRAM and other memory costs on the mobile division. With the increasing demand for high bandwidth memory (HBM) for artificial intelligence servers, the significant shift of traditional DRAM production capacity to this area has also increased the cost of memories used in smartphones. In addition, advanced production processes, energy expenses and supply chain costs continue to pressure manufacturers’ margins.
Samsung announced that it will focus on products that provide higher added value in order to increase profitability again in the third quarter. The company aims to increase sales of the Galaxy Z Fold 8 series, especially with the Galaxy S Ultra models. These devices in the premium segment are in a more advantageous position compared to the middle and entry segment models in compensating for the rising production costs thanks to their higher sales prices. Despite this, the ongoing price competition in economic class phones continues to be one of the main factors limiting the profit margins of manufacturers.
The announced financial results give important clues about the general outlook of not only Samsung but also the smartphone industry. While strong sales figures alone do not mean high profitability, the increase in component costs can directly affect the financial performance of manufacturers. The extent to which Samsung’s strategy of focusing on premium models in the coming quarters will reduce this pressure will become clearer with the new financial results to be announced.
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