Even though Samsung is selling more high-end phones than ever, the company's mobile division is seeing its profit margins decrease. Manufacturing phones has become increasingly expensive due to the rising price of memory chips. To reduce its losses, Samsung might cut smartphone production by as much as 30%.

Reports indicate that Samsung is slashing its production output for the fourth quarter of this year (Q4 2026). Initially, the company was projected to manufacture around 270 million phones in 2026, thanks to strong sales of its foldable lineup. However, that estimate has now dropped to just 200 million units.

The cost of RAM chips has surged 175% compared to last year, driven by massive demand from AI data centers. So, all smartphone brands are forced to pay substantially more for these chips, resulting in higher overall production costs. To compensate, manufacturers are forced to raise phone prices, a move Samsung has already made multiple times in recent months.

Because of these higher price tags, consumers are upgrading their devices less frequently. Smartphone makers cannot pass the entire manufacturing cost increase on to buyers. Instead, they must absorb a portion of the extra expense, which leads to substantially lower profits. In some cases, devices are even being sold at a loss.

Industry insiders claim there is “absolutely no profit left from selling smartphones.” As a result, Samsung has decided to cut its fourth-quarter production by 30% rather than absorb further financial hits.