The DX (Device eXperience) Division of Samsung Electronics, which oversees its finished product businesses, posted operating losses for two consecutive quarters. As forecasts indicate that cost burdens driven by rising memory semiconductor (hereinafter referred to as memory) prices will continue into next year, the possibility of an annual loss for the first time since the DX Division’s establishment is being raised, suggesting difficulties in improving profitability.
Samsung Electronics announced on the 29th that its DX Division recorded an operating loss of 800 billion won in the third quarter of this year on a consolidated basis. This follows the division’s first-ever operating loss (800 billion won) in the previous quarter, with losses persisting into the third quarter. This stands in contrast to Samsung Electronics’ overall operating profit reaching a record high of 107.4 trillion won during the same period. The possibility of an annual loss for the DX Division this year is also being raised.
The surge in memory prices played a significant role in expanding cost burdens. According to market research firm TrendForce, mobile DRAM contract prices rose by 8% to 13% in the third quarter compared to the previous quarter. Market research firm IDC also analyzed that memory costs borne by smartphone manufacturers surged by approximately 350% year-on-year during the same period.
Due to the impact of rising memory prices, Samsung Electronics’ MX and Network Business Division also recorded an operating loss of 600 billion won in the third quarter. While the division narrowed its loss compared to the previous quarter (operating loss of 700 billion won), driven by the launch effects of new products such as the Galaxy Z Fold8, it failed to offset the burden from rising costs. In particular, Samsung Electronics has focused on selling affordable smartphones to expand shipments in emerging markets and defend its global market share, thereby increasing profitability pressures. This is because mid- and low-priced smartphones are more significantly affected by rising memory prices. For affordable smartphones, intense price competition makes it difficult to reflect increased costs in selling prices.
Although the rise in memory prices is predicted to slow down somewhat in the fourth quarter, cost burdens are expected to continue for the time being. Daniel Araujo, Executive Vice President of the MX (Mobile eXperience) Business Division at Samsung Electronics, stated, “High memory prices are expected to persist into the fourth quarter, creating a challenging business environment across the industry,” and forecasted that “pressure from rising costs will continue into 2027.”
The impact of rising memory prices is also being felt in the home appliance business. According to market research firm Omdia, the proportion of the mainboard in the manufacturing cost of a 75-inch UHD (Ultra High Definition) smart TV increased by 2.5 times, from 8% in the second quarter of last year to 20% in the second quarter of this year. Mainboards are equipped with components such as DRAM and NAND flash. Omdia stated, “As memory supply constraints continue and prices are expected to keep rising, TV prices are highly likely to face upward pressure this year.”
Weak TV demand is also a burden factor. Kim Won-woo, Executive Vice President of the VD (Visual Display) Business Division at Samsung Electronics, predicted that “TV market demand in 2027 will either stagnate or decline slightly.”
For now, Samsung Electronics plans to defend its profitability through productivity innovation based on AX (AI Transformation) and improvements in its revenue structure. The company’s strategy is to maintain the trend of expanding sales of premium products by targeting seasonal peak periods in businesses such as smartphones, TVs, and home appliances, while simultaneously pursuing cost reduction activities through efficiency improvements across all processes, including procurement, development, and sales. Park Soon-cheol, CFO (Chief Financial Officer), emphasized, “The DX Division will strengthen the foundation for future growth through innovation in AI product experiences and improvements in its revenue structure.”
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