The global RAM crisis has moved beyond severely impacting smartphone prices to impacting production. Samsung has reportedly instructed its suppliers to cut production volumes by 20% to 30% in Q4 2026.
Memory Costs Are Making Samsung’s Phones Less Profitable
Korean outlet MoneyToday reports Samsung's Mobile Experience division has decided to significantly scale back on smartphone production to end the year. Initial estimates suggested Samsung was on track to produce 270 million smartphones in 2026, but that number could stall in the low 200 million range due to this decision.
For those unaware, Smartphone production usually dips in Q4 as brands clear their existing inventories to prepare for new product launches. In Samsung's case, as consumers hold out for the early-year Galaxy S series launch, this reduction is larger than ever before.
The core driver of this decision is profitability, or the lack thereof. The main culprit is the ongoing RAM crisis and the insatiable demand for High Bandwidth Memory for AI data centres.
According to TrendForce's data, the cost of a standard 12 GB LPDDR5X RAM module has skyrocketed to $146, an eye-watering 175% year-over-year increase. It is expected to climb another 20% in Q3, potentially hitting $180 per unit.
MoneyToday also cited an anonymous source report stating that given the current memory prices, Samsung's devices "currently yield no profit at all when sold". Besides, this could be a clever decision, considering the Smartphone market is set for a historical 16.7% collapse.
While manufacturers have held up by raising smartphone costs, the water's clearly about to rise above their heads. OEMs face a brutal decision to stop manufacturing because it no longer generates profits.
As we predicted in our extensive piece about the potential repercussions of the global RAM crisis, this seems like the only logical way for brands to hold on to their existing profits and slow down for now.
The global RAM crisis has also led to the resurgence of ODM brands, which should dominate until the RAM crisis stabilises in the future. That said, RAM prices are not expected to slow down anytime before 2029, with the effects of AI expected to follow throughout 2035.
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