Samsung’s Chip Shuffle: Will It Hike Galaxy S26 Prices?

The semiconductor division of Samsung Electronics (DS) has refused to enter into a long-term contract for the supply of memory chips with the mobile business unit (MX), responsible for Galaxy smartphones. Instead of an annual agreement, DS has agreed only to short-term three-month contracts. The reason is DS’s strategic pivot towards high-margin products: HBM memory for AI accelerators and advanced LPDDR mobile chips, prompting the company to restructure its production capacities.

For MX, the situation is complicated by the sharp rise in memory prices: the cost of the 12GB LPDDR5X installed in Galaxy smartphones by late November reached around 70 dollars, more than double the prices at the beginning of the year (around 33 dollars). Simultaneously, the cost of semiconductor systems is rising – SoC purchases in the MX business increased by 25.5% over the year, which has already led to a noticeable rise in the cost of smartphones. The division fears this will affect the prices of the upcoming Galaxy S26 flagship lineup, which will be released early next year.

Despite MX’s attempts to secure stable supplies – negotiations reached top management levels – Samsung DS declined to make concessions, as it is experiencing the peak of the so-called “memory supercycle.” The growing demand for AI accelerators has led to HBM and LPDDR being actively bought by server and generative AI system manufacturers, making such products extremely profitable. According to industry sources, Samsung is reinforcing a course towards strict division of responsibility between departments: business logic and profitability are prioritized over the company’s internal needs.

However, leaks suggest the Galaxy S26 could feature enhanced AI capabilities and potentially benefit from breakthroughs in power efficiency, aligning with Samsung’s ongoing efforts to integrate AI-enhanced features. This makes the adaptation period crucial, as MX strategizes competitive pricing despite material costs.