Samsung's memory chips just posted a record 89.2 trillion won profit. Its own phones posted a loss because of it.

Samsung Electronics' Device Solutions (DS) division — the chip business that makes its DRAM, NAND, and HBM memory — just posted the most profitable quarter in its history: 127.5 trillion won in revenue and 89.2 trillion won in operating profit for the quarter ended June 30, on the AI-driven memory supercycle. In the same earnings release, Samsung's Mobile eXperience (MX) and Networks division — the one that makes Galaxy phones — disclosed an operating loss of 0.7 trillion won, its first since 2011. Same company, same quarter, and, per Samsung's own results language and outside reporting, substantially the same cause.

A record chip profit, an all-time first phone loss

Company-wide, Samsung reported consolidated revenue of 171.5 trillion won and operating profit of 89.5 trillion won for the quarter — also all-time records. DS alone contributed more operating profit (89.2 trillion won on 127.5 trillion won of revenue, roughly a 70% operating margin) than the entire company combined, meaning every other Samsung business unit, including MX's 0.7 trillion won loss on 33.2 trillion won of revenue, netted out to roughly 0.3 trillion won combined. Samsung's own release attributes the MX shortfall to "rising component cost" pressure, without specifying where those components are sourced.

What actually moved: memory prices, not phone demand

The mechanism behind both results is the same: DRAM and NAND pricing. On its Q2 earnings call, Samsung said DRAM's average selling price rose in the mid-40% range and NAND's in the high-60% range from the prior quarter, driven by AI data-center demand for high-bandwidth memory that has left conventional DRAM and NAND supply tight industry-wide — the dynamic reporters have taken to calling "RAMageddon." Samsung also guided that HBM4 sales should more than triple quarter-on-quarter in Q3, reaching over 60% of total HBM revenue in the second half of 2026.

Notably, bit shipments grew far more modestly than prices did — Samsung reported DRAM bit shipments up in the low-10% range and NAND shipments up in the single-digit range quarter-on-quarter, meaning most of DS's revenue gain came from price, not volume. On the same call, Samsung said it has finalized multi-year supply agreements with its top five global data-center customers, locking in demand (and, implicitly, pricing power) years out, on top of the HBM4E samples already shipping to lead customers ahead of a wider ramp.

Samsung is also spending accordingly: total capital expenditure rose to 16.8 trillion won, up 5.5 trillion won quarter-on-quarter, with DS accounting for 15.4 trillion won of that — funding new fab capacity in Pyeongtaek among other sites — and the company separately announced plans for a roughly 400 trillion won semiconductor manufacturing hub in southwestern South Korea. Samsung reportedly told investors it expects the memory shortage driving all of this to persist into 2028, not clear through the next few quarters — meaning the same pricing dynamic squeezing MX now is guided to continue for years, not one bad quarter. Despite the record profit, Samsung shares fell on the results, with reporting attributing the drop to investor concern over the scale of that capex commitment rather than doubt about demand.

The twist: MX pays those higher prices too

The same memory that AI data centers are bidding up is also the DRAM and NAND that goes inside every Galaxy phone. MX's revenue actually grew year-on-year, driven by Galaxy S26 and Galaxy A series sales — demand for the phones themselves held up fine. What didn't hold up was the margin: outside reporting on the earnings call frames this as component costs rising faster than MX could pass them on to phone buyers competing against Apple and Xiaomi on price. Xiaomi, for its part, has reportedly begun cutting storage tiers in response to the same cost pressure — canceling 1TB variants and reverting to 512GB as its top option.

What Samsung has not said publicly is whether its own DS division extends MX any internal discount on DRAM and NAND versus what it charges AI-industry customers. Outside analysts, per reporting on the results, read the loss as evidence that it doesn't — that DS has little commercial incentive to discount components to a sister division when outside buyers are paying far more for the same supply. That reading is plausible given the numbers, but it is analysts' inference, not a transfer-pricing disclosure Samsung itself has made.

Samsung isn't the only company caught on both sides of this cycle — it's just the one where both sides show up on the same earnings release. [Nvidia and SK Group's separate $500 billion Korean AI buildout](#/article/nvidia-sk-group-korea-500-billion-ai-partnership) draws on the same regional memory and compute base that's driving Samsung's DS profit; [Samsung's own company dossier](#/company/samsung) now reflects a chip supplier riding that broader AI-infrastructure wave from one side while its own phone unit absorbs the cost from the other.