Sales of the Galaxy S26 have started strong, but the mood at Samsung Electronics' Mobile Experience (MX) division remains cautious. Despite defending sales volumes with premium products amid a slowdown in the global smartphone market, rising memory prices and component costs are putting pressure on profitability. Additionally, ongoing union issues have made securing a rebound in the second half of the year more critical than ever.
According to industry sources on June 17, Samsung's MX division is reassessing its smartphone strategy for the second half of the year based on the sales performance of the Galaxy S26 series. The Galaxy S26 has attracted market attention with its artificial intelligence (AI) features, camera performance, and premium design. In a climate of weak overall smartphone replacement demand, flagship products have played a stabilizing role.
However, strong sales do not directly translate into improved profitability. The demand for AI servers has driven up prices for DRAM and NAND memory, increasing the cost burden for smartphones. High-end smartphones incorporate numerous expensive components, including mobile DRAM, storage devices, application processors, displays, and camera modules. The pressure on costs is particularly pronounced for premium products, which require higher-spec components.
Samsung is attempting to absorb some of the cost pressures through price increases for the Galaxy S26 and an expansion of its premium lineup. However, raising prices indiscriminately is challenging in a period of consumer slowdown. Apple maintains strong loyalty in the premium market, while Chinese manufacturers are aggressively pricing high-spec products. Samsung must balance maintaining sales volume with profitability.
Internal dynamics also present a variable. Ongoing union issues at Samsung Electronics have led to demands for both organizational stability and performance from the MX division. The smartphone business has a short product launch cycle, and market reactions quickly impact performance. If the organizational atmosphere becomes unstable, it could hinder the speed of development, marketing, and supply chain responses.
The key battleground for the second half will be foldable devices and Galaxy AI. Samsung must reaffirm its leadership in the foldable market with new products in the Galaxy Z series. Although Samsung pioneered the foldable market, competition from Chinese companies is intensifying. Clear differentiation in thickness, weight, durability, battery life, and camera performance is essential.
Galaxy AI will also be put to the test. Since the launch of the Galaxy S24, Samsung has led the AI phone market, but it remains to be seen how much AI features will drive actual replacement demand. While functionalities such as translation, search, and photo editing enhance convenience, they must become compelling reasons for consumers to spend. In the second half, how AI features are integrated with the foldable form factor will be crucial.
Samsung MX faces a heavy burden this second half. It must continue to capitalize on the premium demand confirmed by the Galaxy S26 while reducing component cost pressures and generating new purchase demand through foldable devices and AI phones. If it only defends sales volume, it will struggle to avoid profitability pressures. Conversely, if AI and foldable devices stimulate replacement demand, they could serve as a rebound card to shift the tumultuous internal atmosphere caused by union issues.
An industry insider stated, "The Galaxy S26 has shown that Samsung MX can withstand market slowdowns. The key in the second half will be whether new foldable products and Galaxy AI translate into actual sales and improved profitability."
* This article has been translated by AI.
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