[Edaily Reporter Han Kwangbeom ] SamsungElectronics(005930)While Samsung Electronics posted record-breaking earnings for the second quarter of this year thanks to the semiconductor boom, its MX (Mobile eXperience) division, which oversees the mobile business, slipped into the red due to rising costs caused by “chipflation.” The sharp rise in memory prices, which drove the semiconductor division’s record-breaking performance, acted as a crippling cost burden for the MX division. Consequently, SamsungElectronics plans to make a last-ditch effort in the second half of the year to defend profitability and expand market share by launching the “Galaxy Z8” series and new AI form factors.
According to SamsungElectronics on the 30th, the MX division’s revenue for the second quarter of this year reached 32.3 trillion won, a 13.3% increase compared to the same period last year (28.5 trillion won). While the second quarter is typically an off-season when the impact of new flagship products wanes, the company maintained its position as the global leader in the smartphone market for the second quarter, thanks to steady demand for the Galaxy S26 series launched earlier this year and continued strong sales of the A series.
However, operating profit, which stood at 3.1 trillion won in the same period last year, turned into a loss of 700 billion won. “Chipflation”—driven by rising cost pressures across the industry, including price hikes for global memory and key components—dealt a direct blow to profitability. Combined revenue for the MX and Network divisions, including the network business, totaled 33.2 trillion won, with an operating loss of 0.7 trillion won.
Daniel Araújo, Senior Vice President of SamsungElectronics’ MX Business Division, explained during the second-quarter earnings conference call (IR) that day, “Due to memory supply shortages, smartphone market demand—particularly in the price-sensitive mid-to-low-end product segments—saw a year-over-year decline in unit sales. However, revenue grew thanks to an increase in ASP (average selling price) and a higher proportion of flagship models.” He added, “Profits, however, declined due to factors affecting the industry as a whole, such as rising component costs.”
◇New AI Products, Including the Z8 and I-Wear, to Lead the Charge
SamsungElectronics anticipates that rising memory prices and cost pressures will persist in the second half of the year and plans to seek a turnaround by expanding sales of high-value-added new products and optimizing resource efficiency. Executive Vice President Araujo stated, “Profitability deteriorated as the shortage of mobile memory and rising prices, driven by expanding demand for AI servers, continued,” adding, “Since cost pressures are expected to persist in the second half of the year, we will implement various countermeasures.”
SamsungElectronics will first pursue market share growth centered on its flagship models, led by the recently unveiled “Galaxy Z8” series. In fact, the Galaxy Z8 series is riding a wave of initial success, with sales via live broadcasts on the first day of domestic pre-orders more than doubling compared to the previous model, and the Galaxy Z Fold8 leading the sales charge. Major international media outlets, including Forbes, are also offering favorable reviews, calling it “the most polished foldable Samsung has ever unveiled.” SamsungElectronics plans to overcome component cost pressures through supply chain optimization and strategic collaboration with partners, while boosting initial pre-order demand with differentiated promotions such as the “Double Storage” benefit and a free six-month subscription to “Google AI Pro.”
Additionally, the company’s strategy is to offset rising memory costs by expanding sales of premium devices and promoting upsells within its product lineup. Executive Vice President Araujo emphasized, “While maintaining robust sales of the S26 series, we will successfully launch new premium products such as the Galaxy Tab S12 and Watch Ultra 2 alongside the new foldable series.” He added, “We will strengthen our upselling efforts for the A series, including the A57 and A37, and roll out core AI experiences to lower-end models to fill market gaps.”
◇All-Out Efforts to Expand the AI Ecosystem and Improve Operational Efficiency
The expansion of the AI ecosystem and the introduction of new form factors are also key points to watch in the second half of the year. SamsungElectronics will officially unveil “Intelligent Eyewear,” a next-generation AI device, within the year through collaborations with global eyewear brands Gentle Monster and Warby Parker. Executive Vice President Araujo explained, “While we will generally expand the share of premium sales for ecosystem products, we will also offer new form factor experiences befitting the AI era through the launch of Intelligent Eyewear within the year.”
In particular, to overcome the decline in profitability caused by rising memory costs, the company unveiled a two-track plan to improve its business structure: streamlining resources across procurement, sales, and development, and monetizing services over the medium to long term. Executive Vice President Araujo asserted, “We will minimize the decline in profits by strengthening resource efficiency initiatives across various areas, including procurement, sales, and development.”
Regarding the monetization of the services business, he added, “Based on our user base of hundreds of millions of Galaxy devices worldwide, we are focusing on creating premium value by providing tangible convenience—such as hyper-personalized experiences tailored to individual users’ contexts—rather than simply generating short-term revenue.” He further stated, “We will implement this in phases, taking into account the quality of the services and customer acceptance.”
