The AI industry's demand for RAM has increased production costs for Samsung's Galaxy phones, leading the company to prepare to tighten spending and enforce stricter employee benefits.
Situation in the divisionSamsung's mobile phonesThe Mobile Experience division risks facing losses for the first time, even though the Galaxy S26 Series has performed well in many countries.
However, profits must be offset by rising costs of memory components like RAM, driven by AI industry demand, especially LPDDR5X RAM used in supercomputers anddata centers.
It is estimated that a single AI supercomputer may require memory equivalent to that of 4,600 Galaxy S26 Ultra units, causing global memory prices to nearly double by early 2026 and now accounting for about 20 percent of the production cost of premium smartphones.
This situation has forced Samsung to declare emergency management measures, cutting operational expenses by 30 percent company-wide, and requiring executives below the vice president level to downgrade from business to economy class for short- and medium-haul travel to preserve cash flow.
Meanwhile, the global smartphone market is slowing, with shipments down approximately 4.1 percent, placing Samsung in a difficult position of bearing record-high production costs amid potentially stagnant sales growth.
Source:9to5Google