Rumor
Samsung faces profitability crisis in mobile division due to rising memory and processor costs
Monday, December 1, 2025 at 07:22 AM
Samsung is facing significant profitability challenges for its mobile division due to skyrocketing component costs, particularly memory and processors. The company is reportedly selling its new Galaxy Z Tri-Fold at a loss to compete with Huawei, with production costs exceeding the retail price. Pricing for the upcoming Galaxy S26 series remains uncertain as memory costs are projected to rise 30-40% next year and reliance on Qualcomm's Snapdragon processors increases costs compared to internal Exynos chips.
Context
Samsung Electronics is facing a profitability crisis in its Mobile eXperience (MX) division as semiconductor and processor costs continue to surge. Driven by high demand in the AI sector, memory prices are projected to rise by another 30-40% next year, creating a difficult pricing environment for the upcoming Galaxy S26 series launch in February. To maintain technological parity with Huawei, Samsung recently released its Galaxy Z Tri-Fold at 3,590,400 won, a price point reportedly below its actual production cost.
This margin squeeze is exacerbated by a heavy reliance on Qualcomm’s high-cost Snapdragon processors, as the lack of a competitive internal Exynos alternative has weakened Samsung’s negotiating power. Consequently, President TM Roh has been tasked with leading aggressive unit-price negotiations with external suppliers and internal affiliates like Samsung Electro-Mechanics and the DS Division. The current strategy prioritizes market dominance and supply chain stabilization over immediate financial returns as the company navigates escalating hardware expenses.
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