Samsung may end up losing money on its mobile devices this year

Samsung's recent earnings guidance suggests that the company has likely made more in profit in the first quarter of 2026 than it did in the whole of last year. This remarkable achievement rests largely on the semiconductor division which is seeing insatiable demand for memory chips.

While the company's mobile division is expected to turn a decent profit in Q1 2026, some analysts expect that it could end up losing money on mobile devices this year, particularly in Q2 2026.

Samsung's mobile division is expected to post profits of $2-2.7 billion for the first quarter of this year against prior expectations of $1.35 billion. The lower expectations were rooted in rising DRAM prices which would have reduced the division's profitability.

However, Samsung managed the situation effectively by raising prices for the Galaxy S26 series. It's also believed that the company relied upon existing memory inventory to shield itself from the cost increase as much as possible.

This balancing act has now become more difficult. DRAM prices continue to rise every quarter and analysts are now concerned that the mobile division could actually post a loss in Q2 2026.

Samsung is limited in how much it can raise the prices of new devices. Too big of an increase would lead to a slowdown demand, essentially forcing it to maintain profit margins at the expense of market share. The company is likely to opt for the latter, taking a margin hit to retain its competitiveness in the market.

The fact that Samsung's own semiconductor division is the biggest beneficiary of the memory super cycle does little for the mobile division's fortunes. It can't really obtain chips at preferential prices, which may be one of the reasons why the mobile division has been hedging its memory supply chain exposure through Micron.