Samsung Faces Major Crisis: Record Sales Can't Stop Drastic Measures Amid Soaring Component Costs

Samsung reports record sales of its flagship Galaxy S26 smartphones, as well as a significant increase in profits amid rising prices of memory chips and storage devices. However, within the company everything is not so rosy and there is essentially a large-scale crisis raging.

What is known

According to the Korean publication Fn News, Samsung Electronics has extended its crisis management mode to its mobile division MX, which is responsible for Galaxy smartphones. Previously, similar measures had already been introduced in the television and home appliance departments, but now the company is tightening control in the key business as well.

The reason was the sharp rise in component prices, especially for memory, which has increased more than eight times over the year, as well as the declining profitability of the mobile business amid high competition and rising costs. According to estimates, MX's operating profit in 2026 could decrease by more than 60% compared to the previous period.

Within the division, spending rules are tightening: business trips are being reduced, budgets are being reviewed, and travel restrictions are being introduced – employees below the vice president level must fly economy class even on long-haul flights. The company is also considering personnel redistribution and possible voluntary redundancy programs, as has already happened in other areas. Despite the high demand for the Galaxy S26 series, the rising cost of components could significantly reduce the final profit.

Meanwhile, Samsung's television and home appliance divisions continue to operate in strict savings mode: both areas recorded losses of about 200 billion won ($150-155 million) last year and the situation could repeat in 2026.

As a result, the entire consumer segment Digital Experience (DX), which includes mobile devices, TVs, and home appliances, has come under pressure due to rising costs of components and logistics.

The strengthening of crisis measures in MX shows that even Samsung's key business faces serious challenges, and in the coming quarters, the company may move to even tougher optimization and review of business strategy. Recall, it is already known that the Korean company is discontinuing further production of the expensive Galaxy Z TriFold just four months after sales began.

Source: Fn News