Samsung may cut smartphone output by almost a third in 2026 because of a sharp rise in production costs and declining profitability in its mobile division. According to reports in the South Korean media, the company plans to cut production volumes by 30% in the fourth quarter to avoid further financial losses.
Samsung initially forecast production of around 270 million mobile devices over the year, given strong sales of the foldable Galaxy Fold8 and the top-of-the-range Galaxy S26 Ultra. However, this figure has now been reduced to 200 million.
The main reason cited is record-high memory chip prices. For example, the cost of 12-gigabyte RAM chips has risen by 175% compared with last year, driven by high demand from data centers utilizing artificial intelligence. Furthermore, in the third and fourth quarters, chip prices are expected to rise by a further 20% compared with the previous period.
The rise in costs has affected all smartphone manufacturers, as they are forced to pay significantly more for components. This has led to higher retail prices for phones – in particular, Samsung recently raised prices for both its flagship and budget smartphones. In addition, consumers are less likely to upgrade their devices, which has further reduced sales volumes.
Manufacturers cannot pass the additional costs entirely on to buyers, so they must cover part of them themselves. This leads to a sharp decline in profits and, in some cases, to smartphones being sold at a loss. According to industry insiders, manufacturers are currently making “absolutely no profit from smartphone sales”.
According to a report from South Korea, Samsung’s mobile division expects a loss of 19 trillion won, or about $14 billion, in the third quarter of 2026.
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