Samsung Mobile Division Faces First-Ever Annual Loss as AI Memory Shortage Squeezes Galaxy Margins

Samsung's mobile division is on track to post its first ever annual loss, according to the company's own co-CEO. That is not a small statement. The Galaxy line has been Samsung's profit engine for more than 15 years, and the cause of the looming loss is not falling demand or weak hardware — it is an AI memory shortage that Samsung itself helped create.

Why a Memory Shortage Is Killing Samsung Phones

The simple version: every smartphone needs DRAM and NAND. Both have been hoovered up by AI data centres at unprecedented rates. HBM (high-bandwidth memory) commands prices several times higher than what mobile DRAM does, so memory makers — including Samsung's own components division — are routing wafers to AI customers and away from phones.

That has two effects. First, the bill of materials for a flagship Galaxy has gone up sharply. Second, Samsung Mobile is internally being charged a higher price for the memory it needs, because its sister division can sell those same chips for more to Nvidia, AWS, and Microsoft. The internal "transfer price" wars inside Samsung have been brutal.

The Co-CEO's Quiet Warning

Samsung Mobile co-CEO TM Roh told employees this week that the division could post an annual loss for the first time in its history. Reuters and 9to5Google have both confirmed the warning. Coming from the co-CEO, this is not a doom signal — it is a fundraising signal. Samsung is trying to make sure its components business does not strangle its handset business.

The board is reportedly weighing several measures: a renewed internal pricing agreement that protects mobile margins, a price hike on Galaxy S26 and Z Flip 7, and a slimmer feature roadmap to cut bill of materials. None of these options are pleasant for consumers.

Apple, Xiaomi, and the Competitive Squeeze

Samsung's pain is everyone else's opportunity. Apple just became the largest global smartphone maker for the first time at 21 percent share, and Xiaomi has been quietly stacking premium-tier wins in China and India. If Samsung is forced to raise prices on the Galaxy S26 to defend mobile margins, both rivals will take share — and AI memory shortage or not, share once lost in smartphones is brutally hard to win back.

The other angle is that Samsung's huge memory revenue from AI customers is real. The components division is genuinely thriving — see the broader story of how memory chip stocks reacted to Google's TurboQuant breakthrough. But that does not help the Galaxy team if the price they pay for HBM keeps climbing.

My Take

This was always going to happen. Samsung is structurally split between two businesses — chips and phones — that have completely different margins and growth profiles in the AI era. The chips business is in the boom of its life. The phones business is being slowly choked by exactly that boom. There is no clean fix.

Honestly, the smartest move would be to spin out Samsung Mobile, let it raise prices and own its identity, and let Samsung Semiconductor optimise for AI-customer margins. That is not going to happen for political reasons inside the chaebol, but it is the logical answer.

Frequently Asked Questions

Is Samsung Mobile losing money in 2026?

Samsung Mobile co-CEO TM Roh has warned employees that the smartphone division could post its first ever annual loss in 2026, primarily due to a global AI-driven memory shortage that has pushed up component costs.

Why is there a memory shortage?

AI data centres are consuming unprecedented volumes of high-bandwidth memory (HBM) and DRAM. Memory makers, including Samsung's own components division, are prioritising those higher-margin AI customers over smartphone makers.

Will Galaxy phone prices go up?

Samsung is reportedly considering price hikes on the Galaxy S26 and Z Flip 7 to protect mobile margins. Final pricing decisions have not been announced, but most analysts now expect 2026 flagships to cost more than their 2025 predecessors.

Who benefits if Samsung Mobile struggles?

Apple and Xiaomi are best positioned to gain share. Apple already passed Samsung in Q1 2026 to become the largest global smartphone maker for the first time, and Xiaomi has been adding premium-tier wins across Asia.

The Bottom Line

Samsung Mobile facing its first ever loss is a major business story that gets to the heart of the AI-era squeeze: the same boom that is making memory chip companies rich is starving phone makers of the components they need. Galaxy buyers will pay more, Samsung's competitors will gain share, and the chaebol will face hard internal questions about whether mobile and chips can really stay under the same roof for the next decade.