Samsung Electronics is reducing smartphone production for the fourth quarter with cuts reaching up to 30 percent, as reported exclusively by the Korean economic newspaper Money Today. The Mobile eXperience division faces compressed profit margins driven by soaring memory component costs. This financial squeeze mirrors conditions that forced the company to halt production of the Galaxy Z Tri-Fold device in March.
Production Volume Cuts and IDC Forecast Deviations
These aggressive downward adjustments surpass expectations set by market research firm IDC. IDC previously projected fourth-quarter production at 52 million units, marking a 12 percent decline compared to the third quarter. Samsung now targets total annual output around 200 million units for 2026, falling well short of initial projections of 270 million units.
Part of this annual decline is seasonal. Demand for existing models naturally slows in the fourth quarter as consumers await new releases typically scheduled for January and February. However, component pricing dominates the current downturn.
Surging LPDDR5X RAM Costs and AI Industry Pressure
TrendForce data reveals that low-power LPDDR5X DRAM configured for smartphones reached a price point between 145 and 146 dollars for a 12-gigabyte configuration in the second quarter. This figure represents a 175 percent increase over prices from a year prior. TrendForce subsequently projected another 20 percent spike in the third quarter, driving prices up to 180 dollars per module. Explosive demand for memory chips fueled by the artificial intelligence sector drives these sustained increases.
Memory components historically accounted for roughly 10 to 15 percent of a smartphone production budget. That share has now surged to between 30 and 40 percent. Every chip price hike directly erodes profit margins on individual hardware units.
Impact on Sales Profitability and Galaxy S26 Pricing
Rising semiconductor costs mean Samsung phones currently generate no profit upon sale, according to an IT sector source speaking to Money Today. Production cuts function as a strategic maneuver to protect overall corporate earnings by scaling back manufacturing volumes in categories where profit margins have vanished entirely.
This component cost crisis already forced hardware adjustments earlier in the year. Samsung raised prices on the Galaxy S26 lineup by up to 100 euros to absorb component inflation.
