Even having a family mine wouldn’t be enough! With significant cuts to various expenses, Samsung’s mobile phone division may face its "first-ever loss in history."

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With memory chip prices soaring and intensified competition among enterprises, the profitability of Samsung's consumer electronics division continues to deteriorate. The mobile business unit responsible for Galaxy AI phones may even record its first operating loss since its establishment.

According to Korea's industry sources on the 12th, Samsung Electronics’ Device Experience (DX) division, which is responsible for smartphones, TVs, and household appliances, has initiated multiple austerity measures led by the Chief Financial Officer. These include mandating that vice president-level and lower executives now fly economy class for overseas travel.

Meanwhile, the Device Experience division’s Q1 performance is widely expected to hit a record low, with some analysts even believing that the Mobile Experience (MX) division responsible for Galaxy phones might suffer the first operating loss since the company was founded.

The sharp increase in memory chip prices is the core cause of the profit pressure on the Device Experience division. WallstreetCN reports that Samsung’s Semiconductor (DS) division has doubled the price of LPDDR5X memory supplied for Apple’s iPhone 17 series and has taken a similar price hike stance for Samsung’s internal mobile phone division, leading to a cost dilemma for the latter.

Although prices for the Galaxy S26 series were slightly raised upon release, the industry generally believes that this step cannot fully offset the cost pressures.

Executives Must Fly Economy: Unprecedented Austerity

The most symbolic of the cutbacks is the adjustment of executive travel standards.

Under the current policy, vice president-level and lower executives of Samsung Electronics’ Device Experience division may fly business class or higher on overseas trips. After the new policy takes effect, they will uniformly switch to economy class.

Analysts believe that for a company with annual revenue in the hundreds of billions of dollars, direct savings from ticket classes are limited, but this move signals to both internal and external stakeholders that cost control has escalated to an extraordinary level. The CFO’s direct leadership in drafting the plan also indicates that this round of austerity is not just a routine formality.

In addition to cutting travel expenses, according to Samsung insiders and industry sources, the DX division is also considering relaxing current voluntary resignation application conditions. This includes expanding the eligible scope and increasing severance pay amounts to accelerate workforce optimization.

Nevertheless, it is worth noting that Samsung Electronics' overall operating profit, including the semiconductor business, is expected to break 40 trillion KRW for the first time in Q1 and reach a record high. However, this impressive number will mainly be contributed by the semiconductor division, masking the struggles of the Device Experience division in overall data.

Apple “Accepts All,” Triggering a Chain Reaction of Price Increases

With memory costs soaring, some within Samsung are delighted while others are troubled.

WallstreetCN reports that in negotiations between Samsung’s semiconductor division and Apple for iPhone 17 memory supply, Samsung originally planned to increase LPDDR5X prices by around 60% and set a starting quote with a 100% markup to leave room for later bargaining.

Surprisingly, Apple immediately accepted the quote, setting the price. Apple then specifically held an urgent meeting with Samsung’s semiconductor division to discuss supply volume for the first half of the year.

Samsung’s semiconductor division thereby confirmed its pricing power in the memory market and then implemented a similar price increase for internal transactions. Although the mobile division’s price hike was less than that for Apple, it was still significantly higher than the previous procurement cycle.

This outcome is costly for Samsung’s mobile division. Memory chips are core components of smartphones, and their rapid and sustained price increases have directly pushed up production costs for the mobile division.

Some analysts point out that the Galaxy AI smartphone division may record an operating loss in Q1, marking the first since the unit’s inception.

Meanwhile, in the TV and home appliance markets, persistent competition from peer companies has continually squeezed profit margins, making it difficult for the division to offset rising costs through price increases.

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