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Samsung’s smartphone business is coming under pressure from an unexpected source: the rising cost of memory chips. The company is reportedly preparing to scale back handset production during the final quarter of 2026, with the reduction potentially reaching 30%.

The move comes as higher memory and semiconductor prices make it increasingly difficult for Samsung to maintain profitable margins on some smartphone models.

Production Plans Face a Significant Revision

Samsung’s Mobile eXperience (MX) division has reportedly begun adjusting its production plans for the last three months of the year, according to a report from Money Today.

Industry sources said the company has asked suppliers to cut component shipments by 20% to 30%.

That would represent a much sharper reduction than the forecast previously issued by IDC. The research firm had estimated that Samsung’s production would decline from roughly 59 million smartphones in Q3 to about 52 million in Q4, equivalent to a reduction of approximately 12%.

Seasonal Demand Is Not the Main Problem

Samsung normally sees relatively softer smartphone demand toward the end of the year. Its latest Galaxy flagship models are typically introduced in January and February, encouraging some consumers to delay purchases rather than buy an older generation.

Demand associated with the return-to-school and university season is also concentrated earlier in the year.

However, the current situation is being driven by a much more serious cost issue: the shortage and price surge affecting memory components.

LPDDR5X Prices Surge Amid AI Demand

Data from TrendForce shows that a 12GB LPDDR5X memory chip used in smartphones cost between $145 and $146 in the second quarter.

That price is nearly three times higher than the level recorded a year earlier.

The increase has been largely linked to the rapidly expanding AI industry. AI companies are purchasing substantial volumes of memory chips for data centers and artificial intelligence systems, putting additional pressure on supply.

The situation could become even more challenging. Smartphone DRAM prices may rise by another 20% during the current quarter, potentially reaching around $180 per chip.

Smartphone Margins Come Under Pressure

An industry source said that the combination of higher memory and semiconductor prices means Samsung is currently selling some smartphones with virtually no profit.

Under these conditions, producing fewer devices could help the company protect its overall financial results rather than manufacture additional units with extremely low or negative margins.

The situation highlights how rising component costs can affect smartphone manufacturers even when consumer demand remains relatively stable.

Annual Shipments Could Drop Below Earlier Expectations

Samsung had been on course to ship as many as 270 million smartphones this year, supported by strong sales of several models, particularly the Galaxy Z Fold 8.

If the expected production cuts go ahead, however, total shipments could finish at slightly above 200 million units.

Analysts currently estimate that Samsung’s overall operating profit could reach 106.64 trillion Korean won.

Despite that broader profitability, one securities firm expects the company’s mobile devices business alone to post losses of as much as 19 trillion won.

AI Becomes Both an Opportunity and a Challenge

Samsung’s current situation reflects the contrasting impact of the AI boom on different parts of its business.

The company’s memory semiconductor operations are benefiting from surging AI-related demand, particularly from data centers and AI systems.

At the same time, that demand is pushing memory prices higher, increasing the cost of smartphone production and placing additional pressure on Samsung’s mobile business.

The result is a difficult balancing act for Samsung: the AI boom is strengthening its memory business while simultaneously making smartphone manufacturing more expensive.