Report: Samsung co-CEO TM Roh told company leaders that the mobile division MX could report its first ever annual loss this year, amid RAM and storage shortages
As AI continues to eat up the market's RAM output, smartphones are in crisis as costs continue to skyrocket.
Context & Ripple Effects
Samsung’s recent coverage shows a split within the company: analysts expected a sharp Q4 profit increase on the back of an AI-driven memory shortage, while MX now faces the prospect of an annual loss because RAM and storage are scarce and costly. The contrast matters because Samsung participates in both the constrained component market and the consumer-device market absorbing its costs.
Earlier coverage also tied Samsung’s earnings volatility to cycles in chip pricing and smartphone demand. This report suggests AI demand is redirecting that familiar semiconductor cycle into a direct margin problem for handset makers.
First-order effects
- MX faces immediate pressure on smartphone bill-of-materials costs, with a potential first annual loss forcing closer scrutiny of device pricing, specifications, and spending.
- Samsung’s memory business benefits from tight supply while its mobile unit bears the downstream impact, making internal portfolio performance more uneven.
Second-order effects
- Other smartphone makers buying RAM and storage confront the same input-cost pressure, increasing the likelihood of higher handset prices, lower memory configurations, or margin compression.
- The shortage strengthens the incentive to prioritize memory supply for AI-related customers and products, potentially leaving consumer-device procurement with less bargaining power until capacity catches up.
Third-order effects
- If AI demand keeps commanding available memory output, consumer electronics will increasingly compete with data-center infrastructure for components rather than simply benefiting from lower-cost commodity memory.
- The episode underscores a structural tension for vertically integrated hardware groups: owning component capacity can cushion supply risk at the corporate level without preventing losses in device divisions exposed to end-market pricing constraints.
The trend: AI-led demand is turning memory from a cyclical consumer-electronics input into a strategic bottleneck whose costs spill into downstream devices.