Amid Samsung's 20 Trillion Won Profit Celebration, Mobile Division Struggles with Rising Component Costs

Preliminary Q4 2025 Results Announced by Samsung Electronics
MX Division Operating Profit Around 2 Trillion Won, Down 47% from Previous Quarter
Galaxy S26 Series to Feature In-House Exynos Mobile AP

In the fourth quarter of last year, Samsung Electronics achieved a record-breaking operating profit of 20 trillion won, but the Mobile Experience (MX) division's performance faltered somewhat due to rising prices of key components such as memory semiconductors.

No Tae-moon, CEO of Samsung Electronics and Head of the Device Experience (DX) Division

On January 8, Samsung Electronics announced its preliminary results for the fourth quarter of last year, posting an all-time high quarterly operating profit of 20 trillion won. Of this, the contribution from the Mobile Experience (MX) and Network divisions is estimated to be around 2 trillion won, representing a 47% decrease compared to the previous quarter. During this period, there was a continued gap in flagship smartphone launches, and profitability declined due to rising prices of major components such as semiconductors.

Recently, with the surge in demand for artificial intelligence (AI), the company has focused its capabilities on producing high-performance memory chips such as HBM, leading to continued cost pressures across the semiconductor supply chain outside of AI. As demand for high-capacity, high-performance memory increases, it has become more difficult to secure general-purpose memory used in smartphones and PCs, resulting in price hikes for key components. As a result, the MX division, which oversees mobile products such as smartphones, tablet PCs, wearables, and related user services, has been hit directly.

Looking at this year's operating profit for the MX and Network divisions, the first quarter recorded 4.3 trillion won, the second quarter 3.1 trillion won, and the third quarter 3.6 trillion won, showing solid growth. However, from the fourth quarter, the impact of memory chip price pressures has become more pronounced.

A Samsung Electronics official stated, "Hardware investments by data center companies are expected to continue expanding due to the competition to secure AI infrastructure in the fourth quarter," adding, "In the PC and mobile markets, supply shortages are expected to intensify due to server-centric supply strategies by suppliers and increased installation volumes driven by on-device AI."

Additionally, while the release of the Galaxy Z Fold 7 and Flip 7 in July last year helped improve third-quarter results thanks to positive market response, in the fourth quarter, although the Galaxy Z Tri-Fold saw initial success, high production costs limited its contribution to profitability.

As a result, there are expectations that the price of the Galaxy S26 series, which is scheduled to be released next month, will be raised for the first time in about three years. No Tae-moon, CEO of Samsung Electronics and Head of the Device Experience (DX) Division, said at a press conference held in Las Vegas, Nevada, United States, on January 5 (local time), "Among the various management environments this year, we are particularly concerned about the rising material costs of key components, especially memory prices," adding, "The increase in prices of major components will inevitably have some impact on the products our company sells, in one form or another."

To improve smartphone profitability, Samsung Electronics plans to reduce costs by equipping the standard and Plus models of the Galaxy S26 series with its in-house mobile AP, the Exynos 2600. The mobile AP, a key component that serves as the brain of the smartphone, typically accounts for over 30% of the smartphone's production cost.