Smartphone Sales to Struggle in 2026, Samsung's New Money-Making Machine Revealed

Jakarta, CNBC Indonesia - Smartphone sales are predicted to experience a contraction throughout 2026, due to a crisis of memory chip shortages that is triggering surges in production costs. Several smartphone manufacturers have already begun adjusting to higher selling prices to offset margin reductions.

Analysts predict that smartphone price increases not matched by specification improvements could trigger a decline in public buying interest. As a result, global smartphone sales are projected to slow.

Amid this turmoil, the world’s ‘smartphone king’ Samsung is instead harvesting profits. The South Korean giant has emerged as one of the main beneficiaries of the AI data centre boom.

For context, the shortage of traditional chips for smartphones and laptops is actually due to the surge in demand for high-bandwidth memory (HBM) chips for AI data centres.

Chip price increases have been observed to more than double in just the first quarter of 2026, driven by high demand for both traditional and AI chips, as well as insufficient supply in the market.

Although Samsung’s smartphone business is also affected by the memory chip shortage, its chip business has become a significant ‘money-making machine’. As the world’s largest memory chip producer, Samsung estimates operational profits of 57.2 trillion won for the January to March period.

This figure is far higher than the LSEG SmartEstimate forecast of 40.6 trillion won. It also marks an increase of more than eightfold from 6.69 trillion won in the previous year.

This record-breaking performance is nearly three times the previous quarterly operational profit record for Samsung of 20 trillion won, achieved in the fourth quarter of 2025.

Research firm TrendForce estimates that contract prices for DRAM (dynamic random access memory) chips will rise by more than 50% this quarter due to the ongoing supply shortage.

“Because customers are anticipating further increases, actual contract prices have become higher, thus exceeding expectations,” said Kim Sunwoo, a senior analyst at Meritz Securities, quoted from Reuters on Tuesday (7/4/2026).

Samsung is also benefiting from the depreciation of the South Korean won to its lowest level in nearly 17 years against the US dollar, which has boosted repatriated revenues.

Samsung shares rose 1.4% to 195,800 won per share on Tuesday (7/4) morning.

Kim estimates that Samsung’s chip division generated operational profits of 54 trillion won, contributing 95% of the total profits. The world’s second-largest smartphone maker after Apple also posted better-than-expected performance, booking profits of 4 trillion won in its mobile division.

These profits did slightly decline from the previous year but were better than market concerns. Samsung’s mobile business remains ‘secure’ thanks to the use of low-cost component stockpiles.

Nevertheless, margins are likely to come under increasing pressure in the second quarter due to rising costs of memory chips and other components, as well as materials, amid the conflict in the Middle East.

Samsung stated that its revenues are estimated to grow 68% to 133 trillion won for the January to March period. The company will release detailed first-quarter revenue figures on 30 April.