Report: Samsung considers adopting Chinese DRAM to reduce Galaxy A series costs

Amid the wave of "chip inflation," Samsung Electronics is brewing a counter-move.

According to Korea’s technology media Asia Times, Samsung Electronics is seriously evaluating the feasibility of using low-cost domestic Chinese mobile DRAM in mid-to-low-end smartphones such as the Galaxy A series, in order to significantly compress manufacturing costs.

Samsung Electronics currently holds only about 0.6% of the Chinese smartphone market share. Analysts believe that if this strategy is implemented, it would help boost the overall revenue of its Mobile Experience (MX) division, which is currently facing severe profit pressure—with several Korean securities companies predicting that Samsung’s MX division may record losses in the second quarter this year, ranging from 200 billion to 1 trillion Korean won. Samsung Electronics responded by saying it "cannot confirm" the relevant report.

"Chip Inflation" Hits Mid-to-low-end Market, Rivals Forced to Retreat

The boom in artificial intelligence data center construction has driven up the prices of storage chips and other key components, putting the global smartphone industry chain under pressure, with China being the most affected.

Major phone makers such as Apple, Xiaomi, OPPO, and vivo have raised the prices of new products or lowered their annual shipment targets by 15% to 20%, as they are unable to absorb the rising costs. In June this year, Apple already increased the prices of MacBook and iPad by about $100 each, and the market generally expects that this fall's new iPhone will also see a price hike.

Unlike Apple or Huawei, who have strong brand premium power, Chinese brands such as Xiaomi, OPPO, vivo, and Honor have limited room to maneuver—the cost increase cannot be passed on to consumers, causing them to "lose more as they sell more," and companies are forced to proactively reduce output. Samsung Electronics sees this situation as an exploitable market gap.

MX Division Under Pressure, China Strategy Seeks Breakthrough

Samsung’s MX division is experiencing a rare profit predicament, providing an urgent financial backdrop for the above strategy.

Several major Korean securities firms have recently downgraded their annual performance expectations for Samsung Electronics' MX and network divisions, raising the possibility of a second-quarter loss. Estimated losses for the second quarter by each institution are: Hana Securities—200 billion won, Samsung Securities—584.1 billion won, Eugene Investment & Securities—1 trillion won, iM Securities—800 billion won. Samsung Securities’ adjustment is the most significant—it downgraded the MX division's full-year 2025 operating profit forecast from previously 3.41 trillion won to an operating loss of 5.841 trillion won.

Against this backdrop, introducing low-cost Chinese DRAM to compress material costs is seen as one of Samsung’s potential paths to restore MX division profitability.

Analysts: Strategy is Realistically Feasible, Choice of Entry Points Has Strategic Importance

Industry experts are generally positive about Samsung's move.

Sim Woo-jung, a home appliance and digital transformation research expert at Korea Industrial Research Institute, said that as Chinese companies continue expanding demand for domestic DRAM, international makers like Apple and Samsung may also consider introducing Chinese DRAM under cost pressure. He believes that If Samsung can increase supply of low-priced models like the Galaxy A series, "it will have practical significance for raising market share."

Sim Woo-jung also pointed out that, given that the market already expects the MX division to lose money in the second quarter, the urgency and attention of this strategy will be further heightened.

Currently, Samsung's market share in China's smartphone market is around 0.6%, which is almost marginal. If Samsung takes advantage of rivals' contraction to re-enter the mid-to-low-end price segment with a cost advantage, it is both defensive and offensive—for Samsung, it can stabilize MX business shipment scale, and also provides a practical path to rebuild its presence in the Chinese market.

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