What you need to knowSamsung’s mobile division has reportedly entered an emergency management phase due to rising component and logistics costs.Despite record Galaxy S26 pre-orders, Samsung’s smartphone profits may fall sharply in 2026.Memory prices have surged by over 850% as AI data centers compete with smartphones for components.
2026 is shaping up to be a gloomy year for the smartphone market overall, and a new report from a Korean outlet suggests Samsung is already starting to feel the pressure.
Samsung’s Galaxy S26 series is reportedly off to a strong start. The company has sold a record number of pre-orders for the lineup, with most of them going toward the Galaxy S26 Ultra. Sales appear to be driven by the refined features in the new lineup, particularly the Privacy Display, which users are reportedly enjoying.
Despite that early success, Samsung still seems to be facing difficulties in the broader smartphone market.
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According to Korean outlet FNNews (via @jukan05 on X), Samsung has reportedly “declared an emergency management regime for its mobile phone division.” The move has placed the entire Device eXperience (DX) division into crisis mode. This division includes not only Samsung’s smartphone business but also its smart TV and home appliances units.
The main reason cited is the same challenge affecting the wider smartphone industry in 2026: rising component costs. Memory prices have surged since the second half of last year, reportedly by more than 850%, as AI data centers compete with smartphone makers for the same components.
The situation is reportedly severe enough that Samsung could face what the report calls a potential ‘first-ever operating loss’ for the division.
Samsung may already be feeling the 2026 slowdown
(Image credit: Derrek Lee / Android Central)
Adding to this, the ongoing conflict in the Middle East has reportedly increased logistics costs. A Samsung spokesperson told the outlet, “With raw material costs under extreme pressure from rising semiconductor prices, and logistics costs increasing on top of that, we ultimately had no choice but to put the MX division under emergency management.”
In terms of operating profit, Samsung’s margins have already dropped significantly. Estimates that were around 11% in Q1 2025 have reportedly fallen to roughly 3% in Q1 2026, and the possibility of an operating loss has not been ruled out. The DX division has reportedly instructed all business units to cut costs by 30%.
Samsung also increased the prices of the base Galaxy S26 and Galaxy S26 Plus by $100 this year, despite relatively modest upgrades over the previous generation. That move could be an attempt to offset the declining operating margins.
Android Central’s Take
This situation is genuinely worrying for the smartphone market. If Samsung is already feeling the pressure, it raises questions about how smaller Android brands are coping. We have already seen reports about companies like OnePlus and realme struggling with rising costs, but we still don’t fully understand how severe the impact could be across the entire market.