Samsung is seeing early success with the Galaxy S26 smartphone line, but apparently that isn't enough to offset harsh economic realities. Galaxy S26 pre-orders were up 25% in the U.S. according to Samsung. And our Galaxy S26 Ultra review shows that the Privacy Display in particular makes it a compelling upgrade.
But despite the momentum, Samsung is reportedly in "emergency management" mode. Why? Rising memory prices. As massive as Samsung is, the company isn't immune to price increases taking a large chunk out of its profits.
Samsung taking radical measures
As you might expect, Samsung is taking radical measures to ensure it stays profitable, as reported by FNN News (and shared by Jukan05 on X). Selling millions of phones is great, but selling them at a loss is not something the company can affod. The report claims Samsung has ordered a 30% cost reduction from its Device Experience (DX) division, which includes the Mobile Experience (MX) unit.
According to the report, Samsung might reassign employees to different business units and push some to retire voluntarily to further cut costs.
The AI market is buying up all the RAM it can get, which has led to unprecedented price increases, which some are calling RAMageddon. Other phone components, such as displays and chips, have seen price hikes, too, further pushing Samsung and other phone makers to make drastic changes. Rising oil prices could also eat into profits for Samsung and other smartphone makers.
'Severe' cost pressures
FNN News claims a Samsung official said, “With cost pressures severe due to rising semiconductor prices and the increasing burden of logistics costs, the MX business unit has ultimately been forced to enter an emergency management system."
And the report backs its claim up with numbers: operating profit margins are projected to drop from 11% in Q1 2025 to ~3% in Q1 2026. That would be a massive dip from last year, assuming the projections hold true.
Given how big Samsung is, these moves don't bode well for the smartphone industry as a whole. If the company touting massive pre-orders for its flagship device is feeling the pinch, what's happening to smaller smartphone makers?
