Samsung reportedly cuts phone output as memory costs soar

Samsung Electronics is reportedly cutting smartphone production in the fourth quarter. Memory chip prices driven by AI demand have left its handsets earning little or no profit. Korean outlet Money Today reported that the company's Mobile Experience (MX) division asked suppliers to reduce volumes by 20% to 30%, citing multiple industry sources. Samsung has not confirmed the cut.androidauthority

The report comes as the company's businesses pull in opposite directions. Samsung has projected a record third-quarter operating profit of 107.4 trillion won, mostly from booming memory sales. Over the same period, its own phone unit is absorbing the higher cost of those chips.koreaherald

A deeper cut than expected

Samsung's phone output usually falls late in the year, as buyers wait for the new Galaxy S-series flagships that arrive in January and February. Money Today said this year's planned reduction is larger than the market expected. IDC had forecast output falling from 59 million units in the third quarter to 52 million in the fourth, a drop of about 12%.digitaltrends+1

"Due to rising memory and semiconductor prices, Samsung Electronics smartphones currently yield no profit at all when sold," one industry source told Money Today. Samsung had been expected to produce as many as 270 million phones this year. With the extra cuts, annual output could end up in the low 200-million range.androidauthority+1

TrendForce data cited in the report shows that 12GB of LPDDR5X smartphone memory cost about $145 to $146 in the second quarter, up 175% from a year earlier. Prices could rise another 20% in the third quarter, to as much as $180. Memory makers are giving priority to high-bandwidth memory and server DRAM for AI data centers, and TrendForce expects supply to stay tight into 2027.koreaherald+1

Price hikes and losses

The Korea Herald reported that in October, Samsung raised prices on the seven-month-old Galaxy S26 by nearly 150,000 won in Korea and by $100 to $200 in the US. That came after co-CEO Roh Tae-moon said in July that Samsung "will not pass the full (cost) increase on to consumers". The mobile and networks business lost 700 billion won in the second quarter. Brokerages estimate its third-quarter loss at between 900 billion won and 1.9 trillion won, though Samsung has not yet released divisional results.koreaherald

Making its own chips gives Samsung little relief. "Making memory yourself and obtaining it cheaply are two different things," said Kim Rok-ho, an analyst at Hana Securities, who noted that giving Galaxy a discount would mean giving up higher-priced sales to outside customers. A Samsung representative said Galaxy buys memory from multiple chipmakers and called rising prices an industrywide problem.koreaherald

Meritz Securities expects the Galaxy S27 launch to bring about 1 trillion won in mobile operating profit in the first quarter of 2027. It then forecasts losses of 600 billion to 900 billion won in each of the following three quarters. Kim put it this way: "It's whether Samsung can stay profitable in the second and third quarters, after the new-product effect fades".koreaherald