Samsung preparing massive cutback in smartphone output due to expensive chips - media

South Korean Samsung Electronics plans to reduce smartphone production in the fourth quarter of 2026 by up to 30%. The reason is a significant increase in the cost of memory chips, which is eroding the profitability of the company's mobile division.

This was reported by MoneyToday citing sources in the technology industry. According to the publication, Samsung's Mobile eXperience (MX) division has already asked component suppliers to cut delivery volumes by 20-30%.

Earlier, research firm IDC had forecast that in the fourth quarter Samsung would ship about 52 million smartphones, down from 59 million in the third quarter. That would correspond to a seasonal decline of about 12%. However, the manufacturer is now considering a far larger production cut, according to journalists.

The main problem has been the cost of RAM. TrendForce estimates that in the second quarter the price of 12 GB LPDDR5X mobile memory reached $145-146, up 175% from a year earlier. In the third quarter its price was expected to rise another 20% to about $180.

The increase is driven by high demand for memory used in AI servers. Chipmakers are allocating more capacity to data centers, making components for consumer electronics more expensive.

Analysts at Meritz Securities estimate that Samsung's mobile and network business could have posted an operating loss of 1.9 trillion won in the third quarter. In the second quarter the loss in these segments was about 700 billion won.

The situation is complicated by the fact that smartphone makers cannot fully pass rising costs on to buyers. Retail price increases curb demand, and consumers are keeping their current devices longer.

At the same time, pricier memory has opposite effects on different parts of Samsung's business. The semiconductor division gets additional revenue thanks to AI industry demand, while smartphone and consumer electronics manufacturing becomes less profitable.

On Thursday, October 8, Samsung released preliminary third-quarter financial results, forecasting consolidated operating profit of 107.4 trillion won. Detailed results for individual divisions are to be presented on October 29.

Samsung has not officially confirmed reports of smartphone output cuts. Thus the outlined plans remain information from industry sources, not an announced decision by the manufacturer.

Based on materials from: MoneyToday, SamMobile, Samsung Electronics.