Samsung faces a smartphone profit crisis and scales back production

Samsung is cutting back smartphone production to preserve its profit.

Mariyan Slavov
By
Mariyan Slavov
Samsung Galaxy A57
Samsung is making little to no profit from its smartphones, due to memory price hikes. | Image by PhoneArena
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Uh-oh, Galaxy smartphones might be in trouble! Samsung is gearing up to cut smartphone production amid high memory prices, lower demand, and decreasing profits. The company is trying to preserve its profit projections in a very difficult climate ahead of the Galaxy S27 series launch.

Samsung is cutting smartphone production by 20–30%



According to Korean business news outlet Money Today, Samsung's Mobile Experience (MX) division plans to cut smartphone production. Samsung MX has asked suppliers to reduce component production volumes by 20–30%.

The culprit is rising memory prices, according to industry insiders cited in the report. Samsung isn't making the same profit on smartphones compared to last year, and the company is trying to cut production of devices that generate little to no profit.

People stop buying Samsung phones toward the end of the year


Demand for Galaxy phones normally declines toward the end of the year, as people prepare for the big Galaxy S launch in January. Samsung usually cuts production around the fourth quarter of the year, but Money Today claims the 20–30% decrease is much larger than in previous years.

According to the report, Samsung expected to produce 270 million smartphones this year. Taking into account the Q4 production cuts, this figure could end up in the low 200 millions.

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Buy the new Galaxy S27 or stick with the previous generation and wait for better days?
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Samsung is not making a profit on smartphones



An unnamed industry insider told Money Today that Samsung is making little to no profit from selling smartphones in the current economic climate. The main reason is rising memory costs.

Data from market research firm TrendForce shows that 12GB of LPDDR5X memory, used in flagship smartphone devices, is now selling for $145–$146, which is a whopping 175% increase year-over-year.

There's more bad news, as experts and analysts expect these prices to increase even further — by up to 20% more, reaching $180 for 12GB memory modules. That used to be the price of a entire Galaxy A-series phone.

The Galaxy S27 series could be very expensive



Apparently, Samsung can't raise the prices of phones already produced or in production as fast as the cost of memory components is rising. This means the company is working with smaller profit margins, and before we shed a sarcastic tear for the mega-corporation, there's a more pressing matter that will affect us.

The upcoming Galaxy S27 series is expected to be strongly affected by the situation, with price hikes in the vicinity of $100. That's on top of the already increased prices of the Galaxy S26 models, and there is more bad news still.

A $100 price hike might not sound that bad, but if you're aiming for a model with more storage, the price rises exponentially. An upgrade from 256GB to 512GB will cost an extra $200, while S27 Ultra owners are expected to pay another $400 on top of that if they want a 1TB model — or $600 more than a 256GB model.

The Galaxy S27 Ultra is expected to start at $1,399 and go up to $1,999 for the 1TB model, which is foldable-price territory.

Should you wait or pull the trigger on an older-generation Galaxy phone?



That's a very good question. There's a big design shift expected with the Galaxy S27 series. The overall upgrades might not be that substantial, except for the new chipset, so you might be better off getting a Galaxy S26 device on a deal.

On the other hand, getting a Galaxy S27 Ultra, even at $1,399, might turn out to be a wise move if the memory crisis deepens. You'll get a lot of mileage out of the S27 Ultra. What do you think about this? Buy the new Galaxy S27 or stick with the previous generation and wait for better days?

Read more about smartphone price hikes and the memory crisis here:
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