Samsung’s mobile division has posted its first-ever loss, with the company announcing an operating loss of 800 billion won ($544 million) in its second fiscal quarter. This loss comes despite the company seeing “solid” smartphone sales and growing revenue.
The loss is attributed to soaring memory prices, caused by the AI boom. Samsung’s DX division, which includes mobile, saw revenue growth year-over-year driven by solid sales of flagship products, but operating profit decreased due to increased cost burdens.
Impact on Smartphone Prices
Consumers can expect higher smartphone prices across all categories from Samsung and other brands. This inflation will hit low-income buyers the hardest, as prices for smartphones in the $200-500 category will likely rise the most, percentage-wise.
Samsung emphasized that flagship-level products like the Galaxy S26 Ultra and Galaxy Z Fold 8 series performed well, profit-wise. However, budget phones struggled to show a profit due to higher component costs and already-thin margins.
Company Performance
Samsung’s Device Solutions (DS) Division posted a quarter-on-quarter sales increase of 56 percent, with the Memory Business setting an all-time high for quarterly revenue and operating profit. The company posted a record 171.5 trillion ($119 billion) won in consolidated revenue, an all-time quarterly high.
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Operating profit also hit an all-time high of 89.5 trillion ($62.2 billion). “Earnings per share for both common and preferred shares increased by 52 percent to… among the highest levels for global tech companies,” Samsung added.
In comparison to similar situations in the tech industry, Samsung’s decision to focus on “high-value-added products” may help drive growth in future quarters, as it allows the company to capitalize on its strengths in manufacturing memory and storage components.
Samsung’s huge advantage over most manufacturers, as it also manufactures the memory and storage components used in smartphones, may help mitigate the impact of soaring memory prices. The company’s plans to focus on high-value-added products may also help drive growth in future quarters.
Future Outlook
With the company’s mobile division facing challenges due to soaring memory prices, Samsung’s plans to focus on high-value-added products may help drive growth in future quarters. The company’s strong performance in its Device Solutions (DS) Division and Memory Business may also help offset losses in its mobile division.
The company’s decision to focus on high-value-added products may lead to higher smartphone prices, but it may also help Samsung maintain its competitive edge in the market. As the company looks to the future, it will be important to balance the need to drive growth with the need to keep prices competitive.
