Samsung’s phone business is now officially losing money. In its second quarter 2026 results, published on 30 July, Samsung reported that its MX and Networks businesses — MX covers Galaxy phones, tablets and wearables, Networks is Samsung’s telecom equipment business — posted KRW 33.2 trillion in revenue but an operating loss of KRW 0.7 trillion, roughly $480 million. The same quarter delivered the best numbers in Samsung’s history everywhere else: KRW 171.5 trillion in consolidated revenue and KRW 89.5 trillion in operating profit, both all-time highs, driven almost entirely by memory chips.
Why Samsung’s phone division lost money in a record quarter
Samsung’s own explanation is short and unambiguous. Revenue at MX “grew year-on-year (YoY) on solid sales of the Galaxy S26 series and strong Galaxy A series momentum,” the company wrote, but “earnings declined due to elevated component cost pressures across the industry.”
The component in question is memory. AI server demand has pulled DRAM and NAND supply toward data centres and pushed prices up sharply, and Samsung’s release confirms the squeeze is expected to continue: the memory market is “projected to keep the market undersupplied, despite partial demand moderation in mobile and PCs.” Samsung Memory set records in the same quarter precisely because those prices rose. In other words, one Samsung division’s record profit is another Samsung division’s cost line — RAM and flash are inputs to a phone, not outputs.
We flagged this as a likely outcome on 18 July, when analyst estimates put MX somewhere between a sizeable loss and a thin profit. The results confirm the loss end of that range.
What it means for what you pay
If the largest phone maker in the world, one that manufactures its own memory, cannot absorb these costs, smaller brands buying DRAM on the open market certainly cannot. Expect this to show up in three places: higher launch prices, less generous base storage and RAM at each price tier, and quieter shrinkage of what you get for the same money. Samsung’s own language points the same way — the company says it will pursue “efficiency initiatives to mitigate the impact of rising costs” and grow through a “flagship-first expansion” and an “enhanced premium mix,” which is the polite way of saying the money will be made higher up the range.
Early evidence is already circulating. A pricing leak from tipster @billbil_kun, reported ahead of any announcement and therefore unconfirmed, puts the Galaxy S26 FE in France at €799 for 128GB, €899 for 256GB and €1,099 for 512GB — €50, €90 and €170 above the equivalent Galaxy S25 FE launch prices. Treat those figures as a rumour until Samsung publishes its own, but the direction of travel matches what the earnings release says out loud.
Samsung’s second-half plan, including the Galaxy Tab S12
Asked on the earnings call how the mobile unit intends to trade its way out, Daniel Araujo, VP of Mobile Experience, named the second-half lineup directly:
“We’re focused on maintaining strong sales momentum of the S26 series while ensuring the successful launch of new premium products coming out in the second half, such as the new foldable series, Tab S12, and Watch Ultra 2.”
That is confirmation from Samsung itself that the Galaxy Tab S12 and a Watch Ultra 2 are coming this half, after weeks of certification sightings and renders. Araujo added that Samsung is “also putting a lot of effort into upselling within the A series, specifically with the A57 and A37” — upselling being the operative word.
Samsung’s written release lists the same strategy in its own terms: H2 growth built on “the new Galaxy Z8 and S26 series,” an enhanced premium mix across the Galaxy ecosystem, and “AI-driven experiences in new form factors with the launch of its Intelligent Eyewear.” Nothing in either the release or the call suggests cheaper phones are part of the recovery plan.
Sources: Samsung Newsroom, Investing.com earnings call transcript
