Samsung Electronics has instructed manufacturing partners to reduce smartphone production by up to 30% for the fourth quarter. The sharp reduction stems from surging memory component prices that have severely eroded hardware profit margins. The cut directly impacts the company target of delivering 270 million units this year.
South Korean publication Money Today reports that the Mobile eXperience division asked suppliers to lower shipments of components and assembled phones by 20% to 30%. Sharp increases in memory costs triggered the move. Market research from TrendForce shows that 12GB LPDDR5X chips jumped roughly 175% year over year to reach $146 in the second quarter, followed by another 20% increase toward $180 in the third quarter. At these component price levels, several models across the Galaxy portfolio generate almost no operating margin.
Industry research firm IDC previously estimated that Samsung planned to produce 59 million handsets in the third quarter and 52 million in the fourth quarter. A 30% production drop drives final output well below those forecasts. While Samsung targeted 270 million units across the full year relying on foldables like the Galaxy Z Fold8, consumer buying activity typically slows ahead of next generation releases. Lowering assembly volume prevents surplus stock from sitting in distribution channels while curbing financial losses for the mobile group.
