Samsung's Phone Unit Is Losing Money Despite Record Fold Sales

Record sales, red ink

Samsung Electronics is expected to report blockbuster quarterly revenue of around 107 trillion won, yet its MX division — the unit that makes Galaxy smartphones — is projected to post a second consecutive quarterly operating loss. That is despite the Galaxy Z8 foldable series, launched in early August, racking up 1.44 million domestic pre-orders, the highest ever for a Galaxy launch, and despite overall handset shipments rising quarter over quarter.

The culprit is component costs, specifically surging mobile DRAM prices. Flagship phones carry the most memory of any handset category, and foldables need even more to drive their large displays. In that structure, selling more units doesn't dilute the loss — it can deepen it.

Why this is happening now

The force pushing memory prices up isn't smartphones. It's AI data centers. Explosive demand for HBM and server DRAM has pulled manufacturing capacity toward high-margin products, tightening supply of commodity mobile DRAM and NAND. So Samsung's record company-wide results and its money-losing phone unit aren't a contradiction — they're two sides of the same cause. Profit the semiconductor division earns on soaring memory prices comes back as a cost burden for the sister division buying those chips.

How this compares to rivals

Samsung may actually be in the better position here. Because it manufactures memory in-house, the cost increase is recaptured elsewhere on the group P&L. Chinese vendors like Xiaomi, Oppo and Vivo — and Apple, which sources all its memory externally — have no internal hedge against the increase. The pain is especially direct for makers skewed toward mid- and low-tier phones, where memory accounts for a larger share of the bill of materials.

There's a precedent: the 2017–2018 memory supercycle squeezed handset makers the same way. The crucial difference is that smartphones were then the primary demand driver for DRAM, which gave phone makers negotiating leverage. Today, memory suppliers' most important customers are AI server builders.

What it means for buyers

The practical fallout shows up in price and specs. If a manufacturer can't absorb higher costs, it has three levers: raise prices, cut base storage, trim promotions. Industry chatter already points to possible price increases on next-generation flagships, and mid-range models could see more conservative RAM and storage configurations — meaning the steady march toward 16GB RAM as standard may stall.

For consumers, the discount window on current-generation inventory may be widest before next-gen pricing resets upward. For people working in the industry, expect a stretch where product mix and procurement costs — not unit volume — determine whether the quarter is profitable.