Galaxy S26 is a Hit, But All is Not Well at Samsung’s Mobile Division

Things may look solid at a glance for Samsung’s smartphone business, but internally, the picture is more challenging. Despite record-breaking early demand for its latest Galaxy S26 series, the company’s mobile division is suffering from financial pressure. The Korean firm has reportedly declared an emergency management system for its mobile unit, mainly due to recent chipflation.

Samsung declares emergency management for the mobile division

Since last year, emergency management has been underway for Samsung’s VD division (TV business) and DA division (home appliances). The company’s MX division remained the only strong performer within the Device Experience (DX) sector. However, that situation seems to be changing now.

“With cost pressures severe due to rising semiconductor prices and the increasing burden of logistics costs, the MX business unit has ultimately been forced to enter an emergency management system,” said a Samsung Electronics official (via Fnnews).

The cost of memory chips, a key component in smartphones, has increased by over 850% in just one year. This has increased production costs for OEMs, leading to shrinking profit margins. Moreover, the outbreak of war in the Middle East could push oil prices higher, raising transportation and logistics costs for global companies.

Samsung saw its raw material spending rise greatly in 2025 (excluding Samsung Display) as component prices increased. The company spent 99.9475 trillion won on raw materials, an increase of about 8.8 percent compared to 2024. Much of the increase was due to higher costs in the DX division, prompting the firm to order a 30% cost reduction across its business units.

Industry now expects profits from the MX division to decline sharply this year. The unit posted an operating profit of about 12.9 trillion won last year, but it could fall to around 5 trillion won in 2026. In fact, there is chatter on the possibility of suffering losses if cost pressures continue to rise. We’ll learn how the situation shapes up in the coming months.