The price of memory chips has skyrocketed, and competition among companies has intensified, leading to a continuous deterioration in the profitability of Samsung's consumer electronics division. The mobile business unit responsible for Galaxy AI phones may even record its first operating loss since its establishment.
According to reports from the South Korean industry on the 12th, Samsung Electronics' Device Experience (DX) division, which oversees smartphones, televisions, and home appliances, has initiated several austerity measures under the leadership of the Chief Financial Officer, including a mandatory requirement for executives at the vice president level and below to travel overseas in economy class.
Meanwhile, there are widespread expectations that the performance of Samsung's Device Experience division in the first quarter will hit a historical low, with some analysts even believing that the Mobile Experience (MX) division responsible for Galaxy phones may experience its first operating loss since the company's founding.
The sharp rise in memory chip prices is the core reason for the profitability pressure on the Device Experience division. Wallstreetcn mentioned that Samsung's semiconductor division (DS) has doubled the price of LPDDR5X memory supplied to Apple's iPhone 17 series and subsequently adopted a similar price increase stance for its internal mobile division, putting the latter in a cost dilemma.
Although the Galaxy S26 series was slightly priced higher upon release, the industry generally believes that this move is unlikely to fully offset the cost pressure.
<h2>Executives also have to fly economy class, unprecedented austerity measures</h2>
Among the cuts, the adjustment of travel standards for executives is the most symbolic.
According to current regulations, executives at the vice president level and below in Samsung Electronics' Device Experience division can travel in business class or higher for overseas trips, but the new rule will require them to switch to economy class.
Analysts believe that for a company with annual revenues in the hundreds of billions of dollars, the direct savings from changing flight classes are quite limited. However, this move sends a signal to both internal and external stakeholders that cost control has risen to an unconventional level. The CFO's direct involvement in formulating the relevant plans also indicates that this round of austerity is not just a routine measure.
In addition to reducing travel expenses, sources within Samsung and industry insiders revealed that the DX division is also considering relaxing the current voluntary resignation application criteria, including expanding the scope of eligible applicants and increasing severance compensation to accelerate personnel restructuring.
However, it is worth noting that Samsung Electronics' overall operating profit, including its semiconductor business, is expected to exceed 40 trillion won in the first quarter for the first time, potentially setting a historical high. But this impressive figure will mainly be contributed by Samsung's semiconductor division, while the struggles of the Device Experience division are masked by the overall data.
<h2>Apple &#34;accepts the offer,&#34; triggering a chain reaction of price increases</h2>
With memory costs soaring, there are mixed feelings within Samsung.
Wallstreetcn mentioned that during negotiations with Apple regarding memory supply for the iPhone 17 series, Samsung's semiconductor division originally planned to raise the price of LPDDR5X by about 60% and used a 100% increase as the starting quote to leave room for subsequent negotiations.
Unexpectedly, Apple accepted this quote on the spot, and the price was thus fixed. Apple then held an emergency meeting with Samsung's semiconductor division to negotiate the supply volume for the first half of this year
Samsung's semiconductor division has confirmed its pricing power in the memory market, subsequently adopting a similar price increase stance for internal transactions. Although the price increase for the mobile division's supply is lower than that for Apple, it still shows a significant adjustment compared to the previous procurement cycle.
This outcome is costly for Samsung's mobile division. Memory chips are core components of smartphones, and the continuous rapid rise in their prices directly increases the production costs for Samsung's mobile division.
Some analysts point out that the Galaxy AI smartphone division may record an operating loss in the first quarter of this year, which would be the first since the establishment of this division.
Meanwhile, in the television and home appliance market, competitive pressure from peer manufacturers continues to compress profit margins, making it difficult for this division to pass on the rising cost pressures through price increases.

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The Samsung Device Experience Division, under the leadership of the CFO, has launched several austerity measures, including a mandatory requirement for executives at the vice president level and below to travel overseas in economy class, and is considering expanding the voluntary resignation program and increasing compensation amounts. Although Samsung's overall profit for the first quarter is expected to reach a record high, the impressive figures are mainly contributed by memory semiconductors, while the mobile division may face its first operating loss since the company's establishment

- Samsung Electronics faces deteriorating profitability in its consumer electronics division due to soaring memory chip prices and intensified competition.  
- Initiatives such as requiring lower-level executives to fly economy class are part of cost-cutting measures amid expectations of the mobile experience division recording its first-ever operating loss.  
- Despite projected record overall operating profit from the semiconductor division, pressure on the device experience department remains significant due to rising production costs driven by memory chip price hikes.

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Even having a mine at home can't withstand it! The Samsung mobile division may experience "historical first loss" due to significant cuts in various expenses