Samsung Mobile Division Navigates Economic Headwinds and Profitability Shifts as Rising Memory Costs and Global Artificial Intelligence Demand Impact Smartphone Production Strategy Through 2026
The MX Division of Samsung encounters challenges for maintaining profitability because memory prices have increased. The Mobile Experience division of Samsung Electronics anticipates a difficult second quarter period which will extend throughout 2026. The unit achieved financial results which exceeded expectations during the first quarter because it used its current memory reserves and adjusted Galaxy S26 pricing. The supply chain crisis has now reached a stage which has started to threaten our operations according to information provided by ZDNet Korea, which reported that DRAM prices keep rising.
The MX division generated operating profits between 3 and 4 trillion won during the first quarter, which marked a strong performance because the actual profit exceeded the initial market forecast of 2 trillion won. Samsung used its pre existing memory stock to create low cost inventory while implementing price increases on its newest flagship devices which protected the company from market fluctuations. The company has reached maximum capacity in its defensive operations.
The AI infrastructure boom which has emerged worldwide serves as the main driving force behind this transformation. Memory manufacturers have shifted their production focus toward high margin server DRAM and High Bandwidth Memory (HBM) because major technology companies are investing more in artificial intelligence. The industry supply of Low Power DRAM (LPDDR) needed for smartphone production has become restricted due to this industry transition. Industry data indicates that Apple and other major companies already experienced price rises of approximately 100% during the first quarter, with the current quarter expected to see additional price increases of at least 50%.
Samsung gains a special advantage from its Device Solutions (DS) business unit because it makes its own semiconductors. However, MX division analysts believe their operations cannot function without considering market conditions. The company should not internalize DRAM manufacturing because it creates governance issues between corporate governance and corporate governance plus preferential treatment. The MX division now requires market price alignment with present day market prices.
The industry experts are monitoring the current events with some experts predicting that a second quarter deficit will occur. The first quarter results generated a strong base effect, which will make the upcoming profitability decline appear more severe than it actually is. The second quarter of 2026 functions as a critical assessment for Samsung, which needs to determine if its mobile unit can maintain market share while the semiconductor industry focuses on big tech and AI server needs.
