Samsung Mobile faces first-ever annual operating loss in 2026 due to surging chip costs

Samsung's mobile division, a longtime profit engine for the company, is bracing for its first-ever annual operating loss in 2026 amid skyrocketing memory chip costs and intensifying competition. Executives, including Mobile Experience (MX) boss TM Roh, have warned leadership of the grim outlook, rattling management at the tech giant, according to reports from SammyGuru and SamMobile. This potential red ink comes despite strong sales of the Galaxy S26 series, which set records for pre-orders but may not offset the financial pressures.

The core issue stems from an AI-driven surge in memory chip prices, which have jumped about 850% over the past year, severely eroding profitability. Samsung's MX division posted an operating profit of KRW 12.9 trillion (roughly $8.62 billion) in 2025, with a first-quarter profit margin of 11%, but analysts now project that figure could plummet to around KRW 5 trillion ($3.34 billion) this year, squeezing margins to just 3% or even 1%. Insiders cited by SamMobile and Ars Technica note that challenges extend beyond smartphones to foldables, smartwatches, and other products, with tougher rivalry from brands like Apple and Chinese rivals adding to the strain.

Samsung is not facing this storm alone. Other smartphone makers such as Honor, OPPO, Vivo, and Xiaomi are grappling with similar headwinds from the memory shortage, as highlighted in multiple reports. Even within Samsung, the troubles ripple outward: the Digital Appliances division (home appliances) and Visual Display division (TVs and monitors) are forecasted to post combined losses of around KRW 200 billion ($133 million) in 2026, mirroring last year's performance. This comes after a robust 2025, when the company reported full-year revenue of KRW 333.6 trillion and operating profit of KRW 43.6 trillion, buoyed by premium smartphones, AI devices, and a semiconductor rebound.

The MX division's woes contrast sharply with its historical role as a key pillar of Samsung's empire. In the fourth quarter of 2025, it generated KRW 29.3 trillion in revenue and KRW 1.9 trillion in profit, driven by flagship growth and steady tablet and wearable sales, per Samsung's own earnings release. However, seasonal softness, normalized launch effects, and rising costs have flipped the script, with smartphone shipments dipping 1.6% to 222.9 million units in 2024 amid a mid-range market slowdown.

For consumers and the industry, this signals broader turbulence in the smartphone sector, where high-end AI features and premium devices drive innovation but squeeze margins under volatile component prices. Samsung's response remains unclear, though Q1 2026 earnings are expected to show some recovery from new launches like expanded 200MP image sensors. Investors and competitors will watch closely, as a loss in Samsung's mobile unit could reshape market dynamics and force cost-cutting or strategic shifts across the Android ecosystem.