Samsung Warns of First-Ever Smartphone Net Loss as Memory Costs Surge

For decades, Samsung consistently profited from smartphone sales, even amid global economic downturns or supply chain disruptions. This potential financial shift signals a significant challenge for one of the largest smartphone manufacturers in a maturing market, where product differentiation increasingly relies on advanced hardware.

TM Roh, head of Samsung's mobile division, internally warned company leadership about the possibility of this unprecedented net loss. A primary driver behind this outlook is the escalating cost of Random Access Memory (RAM), a critical component for device speed and multitasking capabilities. The price increases are impacting all types of computing hardware, from consumer devices to high-end servers. By mid-2026, RAM is projected to comprise over one-third of the total manufacturing cost for a budget smartphone.

This surge in memory pricing directly correlates with the growing demand for artificial intelligence (AI) capabilities across hardware platforms. LPDDR5x memory, a low-power type of RAM common in mobile devices, has become increasingly vital for enabling on-device AI operations. Nvidia's upcoming Vera AI Central Processing Unit (CPU) exemplifies this trend, featuring up to 1.5 terabytes of LPDDR5x memory. Such high-capacity memory requirements for AI-focused hardware place significant pressure on the global memory supply.

For Samsung, a net loss on smartphones could necessitate strategic adjustments in component procurement, pricing, or product development. The industry faces increasing costs for foundational components, even as the smartphone market matures. This situation highlights the direct impact of the AI hardware race on consumer electronics pricing and profitability.

The coming quarters will reveal how smartphone manufacturers navigate these evolving component costs and their ultimate impact on device affordability and market competition.