Rising memory prices force Samsung to trim phone output by 30%

It is much deeper than forecasters expected. South Korea’s Money Today first reported that Samsung’s Mobile eXperience (MX) division had begun scaling back output for the fourth quarter, with industry sources saying suppliers were told to cut shipments by 20% to 30%.

The research firm IDC had expected only a modest dip, from 59 million Samsung phones in the third quarter to 52 million in the fourth. Thanks to strong sellers like the Galaxy Z Fold 8, Samsung had been on track for as many as 270 million phones this year. After the cut, the total will probably land just above 200 million.

A follow-up report from ETNews in late October put specifics on it. Samsung is cutting Galaxy A production by about 20%, roughly 10 million phones a year, and wants to trim Galaxy A output by more than 10% again in 2027. The freed-up parts are being steered toward pricier flagships, which are more likely to turn a profit.

The culprit is AI. Companies building AI data centers are buying enormous amounts of memory, both specialized high-bandwidth memory and ordinary server DRAM (the working memory computers use). Chipmakers are putting their factories toward those lucrative orders, leaving less for phones.

Prices show how fast this moved. TrendForce data shows 12GB of the LPDDR5X memory used in phones sold for $145 to $146 in the second quarter, nearly triple the price a year before, and phone memory could climb another 20% this quarter to as much as $180.

For a mid-range phone, memory and chipsets now make up around half the cost of building it. Counterpoint Research estimates memory alone reached 43 percent of a typical premium phone’s component costs in the third quarter, up from 14 percent a year earlier.

One industry source went as far as saying Samsung smartphones currently make no profit at all when sold. If each phone barely breaks even, building fewer of them protects the company’s overall numbers.

Here is the twist. Samsung is one of the world’s biggest memory makers, and that business is booming. The company projected a record third-quarter operating profit of 107.4 trillion won, largely from memory chip sales.

Yet brokerages estimate its mobile and networks business lost between 900 billion won and 1.9 trillion won in the same quarter, after a 700 billion won loss in the second quarter. Samsung has not yet published division-level results.

Why not just give Galaxy cheap chips? A Korean analyst explained that making memory and getting it cheaply are not the same thing. Every chip sold to the phone division at a discount is one not sold at a high price to an outside customer. Samsung says Galaxy buys memory from several suppliers and calls the price rise an industry-wide problem.

The most direct effect is price. Samsung has already raised US prices on most Galaxy S26 models by $100:

• Galaxy S26: now from $999.99
• Galaxy S26 Plus: now from $1,199.99
• Galaxy S26 Ultra: now from $1,399.99
• 1TB Galaxy S26 Ultra: up $200 to $1,999.99

Samsung is not alone. Apple raised several existing iPhones by $100, including the iPhone 16, iPhone 17 and iPhone Air, and the iPhone 18 Pro launched $100 above its predecessor.

Fewer Galaxy A phones could also mean fewer deep discounts on budget models, which make up a huge share of what Samsung sells. Analysts say shoppers are already delaying upgrades, waiting for big sales events or buying used phones instead.

Waiting for the Galaxy S27 may not help. A leak suggests another round of price rises, especially for higher-storage models, and analysts note a new phone can be priced with costly memory built in from day one.

• If your current phone works well, holding off is a reasonable choice. Prices are unlikely to fall soon.
• If you need a phone, watch for holiday deals on existing stock and carrier trade-in offers, which can soften the increase.
• Consider refurbished or certified pre-owned models, which avoid the new-phone price hikes.
• Look at storage carefully. The biggest increases hit high-storage versions, so buy only the capacity you will use.

TrendForce expects memory supply to stay tight into 2027, and Samsung itself has warned the shortage could get worse next year and linger into 2028.