Samsung's phone unit posted its first-ever loss — and its own chip division is partly to blame
Samsung's mobile division just posted its first operating loss in recorded history — roughly $487 million in the red for Q2 2026 — even as the parent company reported a record $119.4 billion in consolidated revenue. The divergence comes down to one thing: memory chip prices have surged dramatically, and Samsung's own semiconductor arm is cashing in while its phone business foots the bill.
A company at war with itself
Samsung Electronics as a whole had a strong quarter. Consolidated revenue hit 171.5 trillion KRW ($119.4 billion), up 28% from the previous quarter, and operating profit reached 89.5 trillion KRW. The semiconductor division (DS) drove nearly all of that — posting 89.2 trillion KRW in profit as AI hyperscalers like Microsoft and Google locked in huge memory orders. DRAM prices rose 58–63% and NAND prices climbed 70–75% quarter-on-quarter, per Samsung's Q2 2026 earnings.
The problem for Samsung's MX division — which makes Galaxy phones, laptops, and wearables — is structural. Samsung sells chips to its own mobile unit at full market rates, not at cost. As chip prices soar thanks to AI-driven demand, MX pays the same premium as any outside buyer. Sometimes the chip division reportedly prioritizes more lucrative AI contracts over internal supply entirely. The result: a 700 billion KRW (~$487 million) loss, the first since MX began tracking results in 2011.
Galaxy S26 sold well — just not well enough
The Galaxy S26 series launched to solid demand. Cumulative sales in the first six weeks came in 15% higher than the S25, and 71% of S26 buyers in the US opted for the Ultra model — a strong sign for average selling prices. Pre-orders jumped 25% versus the S25. TechTimes' Q2 2026 breakdown notes the S26 series started at $100 more than the S25 — a gap that held up in Europe, where Samsung kept pricing flat on the Ultra, but hurt in China and Japan, where local rivals like Xiaomi and Oppo undercut on price.
Sales decelerated after week six, and the Galaxy A mid-range line, while steady, couldn't make up the difference. IDC projects the global smartphone market to shrink 12.9% in 2026, so the headwinds aren't going away.
What happens next
Samsung has not confirmed any plans to change its internal chip transfer pricing, and memory costs are expected to stay elevated into 2027–2028. For consumers, that likely means continued pressure on smartphone prices across Android — not just Samsung. Rival OEMs without their own chip supply face the same crunch without even the consolation of a record-breaking semiconductor division to offset it.
