Samsung is reportedly preparing major smartphone production cuts despite maintaining strong sales and a leading position in the global market.

The South Korean technology giant returned to the top of the worldwide smartphone market during Q2 2026, according to Counterpoint Research.

However, strong shipment numbers have reportedly failed to translate into healthy profits for the company’s mobile business.

Rising memory chip prices and increasing manufacturing expenses have placed significant pressure on Samsung’s smartphone operations.

Major Production Cut

According to South Korean publication Money Today, Samsung has instructed suppliers to prepare for a substantial reduction in smartphone manufacturing.

Industry sources claim the company could reduce production by 20% to 30% during the fourth quarter of 2026.

Before the reported changes, Samsung expected to manufacture approximately 270 million smartphones throughout the year.

However, the revised figure could fall to around 200 million units if the reported reductions materialize.

The biggest challenge reportedly comes from rapidly increasing RAM and storage component prices.

Samsung allegedly paid approximately $145 for a 12GB LPDDR5X memory chip this year.

Additionally, that price represents an increase of around 175% compared to the previous year.

These rising expenses have made smartphone manufacturing significantly more costly, even as Samsung maintains strong global shipments.

Higher Phone Prices Did Not Help

Samsung has already attempted to offset rising manufacturing expenses by increasing prices across several smartphone categories.

The Galaxy S26 series and Galaxy Z8 foldable devices entered the market with higher price tags.

Moreover, some recent flagship smartphones have experienced price increases reaching approximately $100.

The company has also raised prices for older flagship models and several mid-range devices.

However, these adjustments have reportedly failed to protect the profitability of Samsung’s mobile operations.

The situation could become even more challenging if memory component prices continue their upward trend.

Industry expectations suggest DRAM prices could increase by another 20% in the coming months.

Consequently, some memory components could reportedly reach prices of approximately $180.

Further increases would create additional pressure on manufacturers attempting to balance competitive pricing with rising production costs.

Samsung Mobile’s First Quarterly Loss

Samsung’s mobile business reportedly experienced its first quarterly loss during the second quarter of 2026.

The company’s Device eXperience division recorded an estimated loss of approximately $544 million.

Meanwhile, reports suggest the smartphone business accounted for around $476 million of that amount.

These figures highlight the financial challenges facing Samsung despite its strong position in the global smartphone industry.

Additionally, continued increases in component prices could place further pressure on earnings during Q3 and Q4.

The reported financial difficulties may explain why Samsung is considering substantial changes to its manufacturing plans.

However, the company has not confirmed the reported production reduction figures in the supplied information.

Memory Business Making Record Profits

While Samsung’s smartphone operations face mounting challenges, its semiconductor business is reportedly experiencing a very different financial situation.

The company’s Device Solutions division produces memory chips and other semiconductor components.

Rising memory prices have reportedly helped this division generate exceptionally strong operating profits.

According to the reported figures, the division earned KRW 53.7 trillion in operating profit during Q1 2026.

Moreover, that amount increased to KRW 89.2 trillion during the second quarter.

Estimates suggest operating profit may have exceeded KRW 100 trillion during Q3.

This creates an unusual situation within Samsung’s broader business operations.

The same memory price increases affecting smartphone profitability are reportedly benefiting the company’s semiconductor division.

Meanwhile, Samsung Smartphone Production could face additional adjustments if component costs remain elevated.

The contrasting performance of these businesses highlights how changing semiconductor prices can affect different divisions within one technology company.

For consumers, continued manufacturing cost pressures could also influence future smartphone pricing decisions.

Ultimately, Samsung’s reported production plans reflect the growing challenge of maintaining smartphone profitability despite strong global demand.