Samsung Electronics' Device Experience (DX) division, responsible for home appliances and mobile products, has reported its first-ever operating loss. The mobile division, once considered a stronghold, has also recorded a loss for the first time since its inception, prompting deeper consideration of strategies for recovery.
On July 30, Samsung Electronics announced that the DX division incurred an operating loss of 800 billion won in the second quarter. Despite generating sales of 48 trillion won, which accounts for about 28% of the company's total revenue of 171.5 trillion won, the division did not achieve any profit.
Most of the losses stemmed from the mobile business. Despite strong sales of flagship models like the Galaxy S26 series and the A series, the mobile division recorded an operating loss of approximately 700 billion won. This marks the first time the mobile division has reported a quarterly operating loss since its establishment.
The Visual Display and Digital Appliances (VD/DA) division also reported a loss of around 10 billion won. Although sales increased slightly by 2% year-on-year due to demand from major sporting events and large-scale promotions, rising costs led to a decline in operating profit.
Cost pressures have significantly impacted the DX division. In the TV business, the ongoing rise in global display prices has increased cost burdens. According to Samsung's business report, the total purchase amount for displays is expected to surge by 35.8% from 58.624 trillion won in 2023 to 79.606 trillion won in 2025.
The increase in mobile component prices has been even more severe. In the first quarter of this year, the price of mobile application processors purchased by the DX division rose by 12% compared to the previous year's average, while the price of mobile memory skyrocketed by 107%.
During the earnings conference call, Samsung stated, "Despite the launch of new flagship models in the second half, it will be challenging to rebound due to global demand slowdown and rising component prices caused by memory supply issues."
Amid soaring component prices, competition from Chinese companies has intensified. Giants like TCL and Hisense are leveraging price competitiveness to encroach on the premium TV market, while smartphone manufacturers such as Xiaomi and Vivo are rapidly increasing their market share in emerging countries.
Samsung plans to undertake a rigorous restructuring, including the withdrawal from unprofitable businesses and organizational renewal. The emergency management system established in the first half of the year will continue into the second half, with personnel from low-profit divisions being reassigned. The company will also consolidate inefficient overseas operations, including withdrawing from the Chinese home appliance market and closing the TV factory in Galanta, Slovakia.
In the mobile sector, Samsung aims to expand its product diversification strategy, focusing on high-value premium lineups. The introduction of the 'Galaxy Z Fold8 Ultra' will help solidify sales of the basic model while ensuring high profitability and enhancing brand prestige.
The integration of artificial intelligence (AI) will significantly reduce costs across the DX division. The company plans to implement generative AI throughout the entire process, from development to manufacturing and marketing, to minimize unnecessary fixed costs and maximize operational efficiency.
Lee Tae-moon, President and Head of the DX Division at Samsung Electronics, stated, "The introduction of external generative AI is a starting point for changing our work methods and execution speed. We will create an organizational environment that leverages AI to enhance the competitiveness of the DX division."
* This article has been translated by AI.
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