[Edaily Reporter Han Kwangbeom ] SamsungElectronics(005930)’s MX Business Division has taken a defensive stance by boosting its global smartphone market share despite facing significant cost pressures due to soaring prices of key raw materials, such as mobile memory. However, profitability is under serious strain, as operating profit turned to a loss in the second quarter due to a sharp increase in procurement costs for key components.
According to SamsungElectronics’ semi-annual report released on the 14th, the price of mobile memory purchased externally by the company during the first half of this year surged by approximately 211% year-over-year. Based on the disclosure, the cost of purchasing mobile memory totaled 5.0426 trillion won (12.2% of total raw material purchases), with Micron and Kioxia listed as major suppliers.
However, this figure reflects only purchases from external suppliers, with internal transactions eliminated in accordance with consolidated financial statement standards. Considering that the MX Division sources most of its mobile memory from SamsungElectronics’ DS (Semiconductor) Division, analysts estimate that the actual cost burden related to mobile memory—including internally sourced supplies—far exceeds the disclosed figure in the 5 trillion won range.
Next, purchases of mobile AP (Application Processor) solutions—a key raw material—totaled 7.4383 trillion won, an increase of approximately 6% year-over-year. This accounted for 17.9% of total raw material purchases. Purchases of camera modules totaled 3.2882 trillion won (7.9%, with prices rising by about 5% year-over-year).
In particular, while the report lists Qualcomm and MediaTek as major suppliers for mobile APs, industry observers estimate that the majority of these purchases were likely concentrated on Qualcomm, given the proportion of flagship models in the lineup. Major suppliers of camera modules included SamsungElectroMechanics and PARTRON CO., LTD. As such, the simultaneous surge in procurement costs for core components placed significant pressure on the MX division’s cost structure.
Due to the burden of rising raw material prices and the impact of inflation, the global smartphone market is projected to shrink to approximately 1.12 billion units this year. The tablet market is also expected to see demand remain at around 140 million units, influenced by rising average selling prices (ASP). However, demand for high-end products is expected to hold steady due to the widespread adoption of AI features and the expansion of premium lineups.
Amid these challenging conditions, SamsungElectronics’ global market share by smartphone unit volume stood at 22.0% in the first half of this year. This marks a continued upward trend following 18.3% in 2024 and 19.2% in 2025, with Samsung maintaining its position as the world’s top smartphone manufacturer for 15 consecutive years since 2011.
In terms of performance, rising product sales drove revenue growth. Cumulative revenue for the MX division, which includes smartphones, reached 69.7986 trillion won in the first half of this year. The average selling price (ASP) of smartphones rose by approximately 7% compared to the annual average of the previous year, supporting the revenue increase.
However, mounting raw material costs directly led to a deterioration in profitability. While the MX division posted an operating profit of 2.8 trillion won in the first quarter of this year, it recorded an operating loss of 700 billion won in the second quarter—when the impact of rising component costs was fully reflected—marking a shift into the red. As a result, cumulative operating profit for the first half of the year stood at approximately 2.1 trillion won.
Looking at production and capacity utilization, production capacity for smartphones and other products in the first half stood at 134.78 million units, while actual production totaled 113.317 million units, resulting in a capacity utilization rate of 84.1%. SamsungElectronics is operating its production systems at global hubs, including its Gumi facility in South Korea, as well as in Vietnam, India, and Brazil.
