Samsung is cutting smartphone production by 20-30% in the fourth quarter due to rising memory costs, with LPDDR5X DRAM prices up 175% year-over-year. The company's mobile division is reportedly operating at a loss while the semiconductor memory (HBM) business is more profitable, suggesting an internal resource allocation rather than pure demand weakness.
Samsung reports record operating profit of 105 trillion won (up 763% YoY) driven by strong HBM4, DRAM, and NAND sales with significant margin expansion. Bank of America raised its 2030 global memory market forecast to $2.0 trillion, citing AI demand and increasing memory requirements per accelerator, projecting a potential $10 trillion sector fair value based on high operating margins.
Samsung Electronics is cutting smartphone production by up to 30% in the fourth quarter due to sharply rising memory chip prices driven by AI industry demand, making smartphones unprofitable to sell. The company had expected to produce 270 million smartphones this year but will now fall short, with memory costs like LPDDR5X up 175% year-over-year.
Samsung Electronics plans to reduce smartphone production by up to 30% in Q4 2026, cutting annual output from 270 million to just over 200 million units. Rising memory chip prices, driven by AI demand, have made current smartphone sales unprofitable, prompting the company to cut production to maintain overall profitability.
Memory chip executives from Micron and Samsung expect RAM shortages to persist through 2028, driven by surging AI and server demand that diverts manufacturing capacity from consumer devices. Micron CEO Sanjay Mehrotra stated that demand will exceed supply for years, with new manufacturing facilities not coming online until 2028 and production ramping gradually thereafter.
Samsung warns that HBM (high-bandwidth memory) demand for AI could consume nearly 30% of global DRAM wafer capacity by 2027, potentially squeezing RAM supplies for smartphones. This shift may impact future Galaxy flagships through reduced RAM availability, higher component costs, and the transition to LPDDR6 technology.
An investment analysis argues that HBM (high-bandwidth memory) is an engineering mistake due to escalating costs and thermal challenges, citing the failed Rubin HBM4 rollout where vendors couldn't meet Nvidia's speed demands. The author maintains a contrarian view on DRAM stocks while predicting HBM will see a 90% volume decline within 7-10 years as alternative solutions like CXL become viable.