Samsung's Memory Chips Drove a Record Quarterly Profit. Its Phones Lost Money to the Same Shortage.

A 256GB Galaxy S26 cost 149,600 won more on October 1 than it did the week before. Samsung didn't point to tariffs or a weak won to explain the increase. It pointed to DRAM, the memory chip that now eats up nearly half the cost of building a premium phone and whose price has roughly doubled since March.

That single price change is a small window into something much bigger. The AI buildout has turned memory chips, the unglamorous commodity parts inside every phone, laptop, and server, into the tightest and most expensive component in electronics. Samsung happens to be both one of the chipmakers causing that squeeze and one of the device makers getting squeezed by it, which makes its own earnings report the clearest evidence yet of who the AI memory boom is paying, and who is footing the bill.

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What Changed

Samsung's Mobile Experience and Networks division, the unit that builds Galaxy phones, posted an operating loss of 700 billion won, about $486 million, last quarter. A year earlier, the same business was profitable. Samsung's own earnings release pointed to elevated component costs across the industry, memory chief among them, as the reason margins disappeared despite solid sales of the Galaxy S26 and A-series lines.

The timing isn't a coincidence. DRAM prices tied to smartphones roughly doubled over six months, climbing from about $13 to $26 a unit between March and September, and memory's share of a premium phone's production cost jumped 16 percentage points over that stretch, from 27% to 43%. When the component that makes up nearly half a phone's bill of materials doubles in price, raising the retail price stops being optional. That's exactly what Samsung did on October 1, lifting Galaxy S26 prices by 149,600 won (roughly $105) at the low end and by as much as 276,100 won on the top 1TB Ultra model.

What makes Samsung's situation unusual is the other side of its balance sheet. The same memory shortage that cost its phone business money handed its chip business a record quarter. Device Solutions, Samsung's semiconductor unit, posted an operating profit of 89.2 trillion won, almost the entirety of the company's all-time-high total operating profit of 89.5 trillion won, which was up 1,814% year over year on revenue of 171.5 trillion won, itself up 130%. High-bandwidth memory demand from AI data centers, not phones, is most of why that division is printing money. Samsung's phone unit lost roughly $486 million. Its chip unit, on its own, generated almost the entire company's quarterly profit. One division is paying for the other's shortfall, and the company as a whole just had its best quarter on record.

Why It Matters

Not every device maker has that luxury. Apple doesn't manufacture its own memory chips, so when DRAM and NAND prices spike, there's no internal chip division absorbing the hit on the company's behalf. It raised iPhone Pro prices by as much as $300 this year as memory's share of the iPhone Pro's bill of materials climbed from roughly 10% a year ago to about 34% in the third quarter, a jump TrendForce expects to push past 40% by the first half of 2027. On what turned out to be his last earnings call as Apple's CEO, in late July, Tim Cook described the situation as a '100-year flood' in memory pricing; he stepped down a month later, handing the role to John Ternus.

This isn't limited to phones, either. Laptop makers absorbed a nearly identical hit in September, when memory climbed to 23% of a typical PC's bill of materials during the industry's fastest shipment decline in a decade. That asymmetry, chipmakers capturing the upside while pure assemblers absorb the cost, is the real story behind this earnings season's device price increases. Micron's own record quarter didn't even lift Korea's chip stocks the week it reported, a sign markets had already priced in how lopsided the memory boom's winners and losers would be. Samsung and TSMC were both already raising wafer and foundry prices before this latest round, so the direction here isn't new. What's new is watching the squeeze show up as an actual reported loss inside one of the industry's largest companies, instead of an analyst's forecast.

What to Watch Next

TrendForce's latest forecast has server DRAM contract prices rising another 13% to 18% in the third quarter, even as demand from ordinary consumers cools because buyers are increasingly unable to absorb more cost, not because supply has caught up. That split, resilient enterprise demand against straining consumer demand, is worth tracking, since it determines whether device makers can keep passing costs through or eventually have to eat margin instead.

The structural question is how long this lasts. SK Hynix's CEO has said the shortage could persist until 2030, calling 2027 likely to be the worst year yet, and the company is building a new fab in Indiana on the strength of that view. If that timeline holds, expect more of what Samsung and Apple just went through: device makers raising prices, chipmakers capturing an outsized share of industry profit, and investors having to decide, company by company, which side of the memory bill they're actually holding.

The Pulse24 Take

AI demand is squeezing consumers through higher phone and laptop prices, but that's the smaller part of this story. The bigger part is about where the profit actually lands inside the AI supply chain. Memory makers, even ones like Samsung that also build devices, are capturing most of the value. Pure assemblers like Apple pass the cost along and hope buyers don't balk. Neither Samsung's record quarterly profit nor its phone division's swing to a loss tells the full story on its own. Together, they're the clearest evidence yet that the AI buildout is reshaping who gets rich in consumer electronics, not just how much everything costs.