Samsung might lose money on phones for the first time ever, and AI is to blame

Selling smartphones used to be a license to print money. Everyone wanted one, and each new model was a genuine leap over the last. Those days are gone. The market is mature, most people hold onto their phones longer, and plenty of manufacturers have already bowed out.

Even Samsung, the 800-pound gorilla of Android, is feeling the squeeze. According to a report from Korean outlet Money Today, Samsung MX head TM Roh recently warned company leadership that 2026 could mark the first-ever net loss on smartphones in the company’s history. Let that sink in: Samsung has weathered economic recessions, pandemic supply chain meltdowns, and the Note 7 fiasco without losing money on phones. But this year might be different.

The culprit isn’t weak sales — the Galaxy S26 series is apparently doing fine. The problem is on the cost side. DRAM and NAND prices have gone absolutely bonkers, driven by the insatiable appetite of AI infrastructure.

Here’s the thing: the LPDDR5x memory inside your phone is the same stuff that’s powering the latest AI servers. Nvidia’s upcoming Vera CPU, which replaces Grace later this year, can pack up to 1.5 TB of LPDDR5x per chip. A single rack-scale AI platform with 36 Vera CPUs and 72 Rubin GPUs? That’s enough memory for roughly 4,600 Galaxy S26 Ultra devices (assuming 12GB each).

When hyperscalers are buying memory by the terabyte for AI clusters, component prices don’t go down — they go up. And Samsung, despite being one of the world’s largest memory manufacturers, still has to buy these components on the open market for its own phones. The cost pressure is immense.

This is a weird irony. Samsung is simultaneously one of the biggest beneficiaries of the AI memory boom and one of its victims. The same division that sells DRAM to Nvidia at fat margins is watching its own phone margins get squeezed by those very price increases.

I don’t think Samsung is about to exit the phone business or anything dramatic. But this is a stark reminder that the smartphone golden age is truly over. The hardware is good enough, and the next big upgrade cycle won’t be driven by better screens or cameras — it’ll be driven by AI features that actually require the on-device compute and memory that are currently being hoovered up by data centers.

For now, Samsung’s phone division is caught between a rock and a hard place. Raise prices and risk losing customers to cheaper Chinese rivals, or eat the cost and watch margins disappear. Either way, 2026 is shaping up to be an uncomfortable year in Suwon.