Samsung Reportedly Cuts Smartphone Production by Up to 30% as Memory Costs Surge

Samsung Electronics is reportedly preparing to reduce smartphone production significantly during the final three months of 2026 as rising component costs put pressure on its mobile business. According to South Korean publication Money Today, Samsung’s Mobile Experience division has asked suppliers to cut production by approximately 20% to 30% during the fourth quarter. The report, published on October 8, suggests that the company is reconsidering its manufacturing plans as the cost of producing smartphones continues to increase. The proposed reduction could affect Samsung’s overall production targets for the year, although the company has not officially confirmed the reported figures. The development highlights the growing pressure on smartphone manufacturers to balance production volumes, retail prices and profitability in an increasingly expensive electronics market.

One of the main reasons behind the reported production cuts is the sharp increase in memory-chip prices. Smartphones require dynamic random-access memory, commonly known as DRAM, to run applications, manage multiple tasks and support advanced features. According to figures cited by Money Today from market research firm TrendForce, the contract price of 12GB LPDDR5X memory reportedly reached approximately $145 to $146 in the second quarter of 2026, representing an increase of about 175% compared with the previous year. Prices were also expected to rise further during the third quarter. These increases have made memory a more expensive component in smartphone manufacturing, putting pressure on manufacturers that cannot easily pass the additional costs on to consumers without risking weaker demand.

The rising cost of memory is closely connected to the global expansion of artificial intelligence infrastructure. Technology companies are investing heavily in data centres that require advanced processors and high-bandwidth memory to train and operate increasingly powerful AI systems. This surge in demand is competing for semiconductor manufacturing capacity and contributing to higher prices across parts of the memory market. Samsung is in a complicated position because it manufactures memory chips while also using them in its own smartphones and consumer electronics. Higher memory prices can improve earnings in its semiconductor business while simultaneously increasing costs for its mobile division. Reuters reported on October 8 that Samsung expected record quarterly operating profit, driven largely by strong AI-related memory demand, even as its smartphone business faced pressure from rising component expenses.

If the reported production reduction proceeds, Samsung could manufacture substantially fewer smartphones than initially planned for 2026. Reports suggest that its annual production target could fall from approximately 270 million devices towards the 200-million range. However, the fourth quarter is traditionally a period when Samsung adjusts production ahead of the next Galaxy S-series launch, usually scheduled for early in the following year. Seasonal changes alone therefore do not establish that the company is experiencing a major collapse in demand. The reported scale of the reduction, combined with higher memory costs, nevertheless indicates that Samsung may be prioritising profitability over manufacturing as many devices as possible. The company could also reassess the production of models that offer smaller profit margins compared with its premium smartphones.

The situation could have wider implications for the global smartphone industry if memory prices remain elevated. Manufacturers may respond by raising retail prices, reducing promotional discounts, adjusting device specifications or focusing more heavily on premium products that generate higher margins. Consumers could consequently face more expensive upgrades, particularly in the budget and mid-range categories, where buyers are often more sensitive to price changes. Market conditions are already showing signs of strain: preliminary figures reported by Reuters on October 12 indicated that global smartphone shipments fell 20% year over year in the third quarter of 2026, with memory shortages and higher component costs among the factors affecting the market. For Samsung, the challenge will be to protect its mobile business while benefiting from strong demand for memory chips used in AI infrastructure.