The last few months have been an incredible upward battle for both smartphone manufacturers and consumers. With RAM prices soaring sky high, OEMs are left with no choice but to increase the prices of their new phones and even existing models. As consumers have been left to feel the heat, the smartphone sales have declined in return. Now, this is said to lead to a historic first-ever financial loss at Samsung's MX semiconductor division.
Samsung Semiconductor Preps for an All-Year Financial Loss
As per a report from South Korean publication MT Co, TM Roh, the head of Samsung Mobile division, has warned internal management of the brand's first-ever semiconductor business loss. He has asked the board of directors to expect an all-year loss, meaning that Samsung's MX division has already lost and will lose more revenue throughout 2026.
The main culprit, as expected, is the boom in AI data centres and hardware-level demand for RAM and NAND storage. With over 42% market share in the LPDDR business, Samsung has been unable to keep up with the exponentially high demand from vendors like Tesla and Nvidia.
This, in turn, has made Samsung Foundry ship its last drop of RAM stock to these AI behemoths. Moreover, it is also responsible for less commercially available RAM for the consumer-grade electronics market in general and the smartphone OEMs in particular. Hence, to accommodate the RAM requirements of a single Nvidia AI supercomputer, Samsung had to lose out on as many as 4,600 units of the Galaxy S26 Ultra using the LPDDR5X RAM.
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The direct effect of rising RAM prices and crunching demand has already been felt in countries like India and South Korea. Samsung recently increased the Galaxy Z Fold, Galaxy Z Flip and Galaxy S25 Edge prices in Korea. Now, a similar trend is visible in its mid-range and budget portfolio, with higher MSPs across the Galaxy A, Galaxy M and Galaxy F series.
All of these factors combined have also reduced the gross demand for smartphones. A recent Counterpoint report revealed a sharp downturn in the Indian smartphone market, with 9% drop already. This percentage is expected to only climb, painting the inevitable picture of no respite.
With OEMs rising prices, consumers facing the heat and now even the semiconductor business under threat, it doesn't seem long before the growth of AI will lead to the end of the smartphone market the way we know it today.
