Samsung’s Mobile Business Reports First-Ever Loss Despite Record Smartphone Sales

Image Courtesy: Stefan Vazharov

Samsung’s mobile business has reported its first-ever quarterly operating loss, even as flagship smartphone sales remained strong, highlighting how soaring component costs driven by the AI boom are reshaping the industry’s economics.

The company’s Device eXperience (DX) division, which includes its Mobile eXperience (MX), TV, and home appliance businesses, posted an operating loss of 800 billion won, about $544 million, during the second quarter. Samsung said revenue from its smartphone business increased thanks to strong demand for the Galaxy S26 lineup and A series devices, but rising memory and other component costs significantly reduced profitability.

Samsung said premium devices, including the Galaxy S26 Ultra and Galaxy Z Fold 8, remained profitable. However, lower-priced smartphones, which already operate on thin margins, were hit hardest by higher manufacturing costs. The company said it plans to focus more heavily on high-value products in the coming quarters to improve profitability.

The financial results underscore the growing impact of the AI industry’s demand for high-performance memory chips. As AI infrastructure expands worldwide, prices for memory and storage components have climbed sharply, increasing production costs for smartphone makers. Analysts expect these higher costs to eventually translate into more expensive smartphones, particularly in the budget and mid-range segments.

Ironically, Samsung also benefited from the same trend through its semiconductor business. The company’s Device Solutions division, which manufactures memory and storage chips, reported a 56 percent quarter-over-quarter increase in sales. Samsung said its memory business achieved record quarterly revenue and operating profit as demand for AI-related hardware continued to surge.

Despite the mobile division’s setback, Samsung delivered record overall financial results. Consolidated revenue reached an all-time high of 171.5 trillion won, roughly $119 billion, representing a 28 percent increase from a year earlier. Operating profit climbed to a record 89.5 trillion won, or about $62.2 billion, while earnings per share also rose significantly.

The contrasting performance illustrates how the AI boom is creating both winners and losers within the same company. While Samsung’s semiconductor business is benefiting from unprecedented demand, its smartphone division is facing mounting cost pressures that could eventually lead to higher prices for consumers.