Even having mines at home can't support it! Massive cuts across all expenses, Samsung's mobile division may face "first-ever loss in history"

Memory chip prices soar, and corporate competition intensifies. Samsung’s Consumer Electronics division continues to see deteriorating profitability, and the mobile business unit responsible for Galaxy AI phones may even record its first operating loss since its establishment.

According to reports from South Korea’s industry on December 12, Samsung Electronics’ Device Experience (DX) division, responsible for smartphones, TVs, and home appliances, has initiated multiple austerity measures under the leadership of the CFO, including mandatory overseas business trips for senior executives at vice president level and below to be downgraded to economy class.

Meanwhile, it is widely expected that the first-quarter performance of Samsung’s Device Experience division will hit a historic low, with some analysts even suggesting that the Mobile Experience (MX) division, which handles Galaxy phones, may experience its first operating loss since the company’s founding.

The sharp rise in memory chip prices is the core reason behind the profit pressure on the device experience division. Wall Street Insights mentioned that Samsung’s Semiconductor division (DS) has doubled the price of LPDDR5X memory supplied for the iPhone 17 series, and has responded by adopting a similar price increase stance internally for the mobile division, putting the latter in a cost dilemma.

Although the Galaxy S26 series was launched with a slight price increase, industry experts generally believe that this move will be insufficient to fully offset the cost pressures.

Executives also have to fly economy class, with unprecedented austerity measures

One of the most symbolic measures in this round of cuts is the adjustment of senior management travel standards.

Under current regulations, vice president-level and below executives in Samsung Electronics’ Device Experience division can travel abroad in business class or higher. The new rule will standardize all such travel to economy class.

Analysts believe that for a company with annual revenue of hundreds of billions of dollars, the direct savings from airfare class upgrades are limited. However, this move signals that cost control has risen to an extraordinary level. The CFO directly leading the formulation of related plans also indicates that this round of austerity is not just a routine formality.

In addition to reducing travel expenses, internal sources and industry insiders reveal that Samsung’s DX division is also considering relaxing current voluntary resignation policies, including expanding eligible personnel and increasing severance pay to accelerate personnel restructuring.

However, it is worth noting that Samsung Electronics’ overall operating profit, including semiconductor business, is expected to surpass 40 trillion Korean won for the first time in the first quarter, potentially setting a new record. But this impressive figure will mainly be driven by Samsung’s semiconductor division, with the difficulties faced by the device experience division being masked in the overall data.

Apple “accepts everything,” triggering a chain reaction of price increases

With memory costs soaring, some inside Samsung are happy, others are worried.

Wall Street Insights mentioned that during negotiations with Apple over memory supply for the iPhone 17 series, Samsung’s semiconductor division initially planned to raise LPDDR5X prices by about 60%, starting with a 100% increase as the initial quote, leaving room for further negotiations.

Unexpectedly, Apple accepted this quote on the spot, fixing the price. Apple then held an emergency meeting with Samsung’s semiconductor division to negotiate supply volumes for the first half of this year.

Samsung’s semiconductor division confirmed its pricing power in the memory market through this, and subsequently adopted a similar price increase stance internally. While the price increase for the mobile division’s supply to Samsung phones was lower than that for Apple, it still showed a significant rise compared to the previous procurement cycle.

This outcome is costly for Samsung’s mobile division. Memory chips are core components of smartphones, and their continued rapid price increase directly raises Samsung’s production costs.

Some analysts point out that the Galaxy AI smartphone division may record an operating loss in the first quarter of this year, marking its first since establishment.

Meanwhile, in the TV and home appliance markets, ongoing competitive pressure from industry peers continues to compress profit margins, making it difficult for the division to pass on cost increases through price hikes.

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