Samsung’s phone profit seen falling as chip costs climb

Analyst estimate Samsung’s mobile unit earned around 2.5 trillion won (US$1.68 billion) in Q1 as rising memory chip prices squeezed Galaxy margins.

That estimate from eight brokerages would put the mobile unit about 40% below a year earlier, while Samsung said it will release divisional results later this month.

Samsung’s overall profit was lifted by strong AI server demand, but higher memory chip prices also raised smartphone production costs.

Another brokerage, Meritz Securities, estimated mobile operating profit at about 4 trillion won (US$2.68 billion), citing flagship sales and cheaper inventory bought before memory prices surged.

🔗 Source: The Korea Herald

🧠 Food for thought

Implications, context, and why it matters.

Samsung’s profit boom masks a deep internal divide

Samsung’s mobile margins face pressure because, in premium and flagship smartphones priced above $800, Dynamic Random Access Memory (DRAM) and NAND flash memory make up about 23% and 18% of total manufacturing costs 1.
For core Galaxy S26 configurations, higher DRAM and NAND flash memory prices add roughly $28 to $34 in manufacturing cost 2.
Samsung’s Device eXperience (DX) division, which includes mobile and consumer electronics, has begun cutting costs, including requiring executives to fly economy on flights under 10 hours 1.
The earnings gap could widen sharply, exceeding 20-fold if the semiconductor division’s operating profit nears 200 trillion won (US$134 billion) as analysts forecast 1.

The memory price surge reshapes the consumer tech landscape

Rising memory costs force tough pricing decisions for Samsung, while Apple reportedly plans to keep prices unchanged for major products, including the iPhone 1.
Apple gets some of the lowest chip prices from major memory suppliers, including Samsung, while Samsung’s Mobile eXperience (MX) unit buys memory from Samsung’s semiconductor division and Micron, a US memory chip maker, at market prices 1.
Outside smartphones, the push toward higher-margin AI memory tightens supply and lifts prices for standard DRAM and NAND flash memory, including DDR4, an older but widely used memory standard, plus certain legacy manufacturing nodes used in industrial and automotive designs 3.
Memory suppliers are holding back output and steering capacity to higher-margin products, leaving other electronics makers with less supply and weaker negotiating power 3.