Selling smartphones used to be a license to print money. Everyone wanted the latest slab of glass, and every generation was a meaningful leap over the last. Those days are gone. The market is mature, most people hold onto their phones for three or four years, and a bunch of manufacturers have already folded. Samsung’s still standing, but even they might be heading toward something unprecedented: a net loss on smartphones.
According to a report from Money Today (Korean), Samsung MX chief TM Roh has warned leadership that 2026 could be the first year the company loses money on its phone business. Not during the 2008 financial crisis. Not during the pandemic supply chain nightmare. Now. And the culprit isn’t weak sales—it’s the AI-driven hunger for memory chips.
DRAM and NAND prices have gone berserk. Every hyperscaler on the planet is hoarding LPDDR5x for AI servers, and that’s the same memory your Galaxy phone relies on. Nvidia’s upcoming Vera AI CPU will pack up to 1.5 TB of LPDDR5x per chip. A single rack-scale platform with 36 Vera CPUs and 72 Rubin GPUs? That’s enough LPDDR5x to fill 4,600 Galaxy S26 Ultra handsets (assuming 12GB each). One server eats the memory of thousands of phones.
Samsung’s in a weird spot: they make the chips AND they make the phones. So on paper, high memory prices should be a win for the semiconductor division. But the mobile group buys those chips at internal transfer prices that reflect the market, not at cost. When AI server demand bids up LPDDR5x to insane levels, the phone side gets squeezed. And the Galaxy S26 series, despite reportedly strong sales, apparently can’t generate enough margin to offset it.
This is the kind of structural tension that keeps conglomerate executives up at night. You can’t exactly tell your data center customers “sorry, no more memory for your Rubin racks, we need it for phones.” AI infrastructure spending is the new oil rush, and Samsung’s foundry and memory businesses are all-in. The mobile division is left competing for scraps.
What’s interesting is that Samsung has weathered every storm before—economic downturns, component shortages, even the Note 7 fiasco—and still turned a profit on phones. This time feels different because it’s not a temporary shock. The AI buildout is a multi-year, multi-trillion-dollar endeavor, and it’s fundamentally reshaping the supply chain. Memory makers are prioritizing high-margin server DIMMs over mobile chips because that’s where the real money is.
I don’t think Samsung is about to exit the phone business or anything dramatic. But this is a stark reminder that even the giants aren’t immune to market forces. If the cost of putting 12GB of RAM in a flagship phone becomes prohibitive, we might see weird trade-offs: smaller memory configurations, higher prices, or thinner margins. None of those are great for consumers.
For now, watch the memory spot prices. If LPDDR5x stays elevated through the second half of 2026, Samsung’s Q3 earnings call is going to be very uncomfortable. And if the company that sells more phones than anyone else can’t make money doing it, that’s a signal the whole industry should be paying attention to.
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