GoKawiilSelling smartphones used to be easy—everyone wanted one, and every new phone was a lot better than the one that came before. Things are different now that smartphones are mature products. Plenty of manufacturers have thrown in the towel, leaving big players like Samsung to sell a new phone every couple of years. But even Samsung may find it tough to turn a profit in 2026 thanks to the ongoing race to build more AI capacity.
According to Money Today (Korean), Samsung MX (mobile experience) head TM Roh has warned company leadership that it could be headed for the first net loss on smartphones in the company’s history. Even during times of economic strife or amid pandemic-related supply chain chaos, Samsung still made money on smartphones. The skyrocketing price of DRAM and NAND may be what finally breaks the streak despite strong Galaxy S26 sales.
Shortages of these components have affected all types of computing hardware, from consumer laptops to servers. The LPDDR5x memory found in most mobile devices is increasingly important for AI. Nvidia’s Vera AI CPU, which will replace Grace later in 2026, will have up to 1.5 TB of LPDDR5x memory. The company’s upcoming rack-scale AI platforms will have 36 Vera CPUs alongside 72 Rubin GPUs. The CPUs in one server alone will consume enough RAM for 4,600 Galaxy S26 Ultra devices (12GB each).
Until recently, the application processor (which includes the cellular radio) was the most expensive component of most smartphones, and the display usually came in right below that. The AI era has upended the formula, roughly doubling the cost of memory and storage. According to Counterpoint Research, RAM will account for more than a third of the cost of building a budget phone in mid-2026. Even with more expensive devices, memory is still north of 20 percent of the cost.