Chipflation Impact: Samsung's MX Profitability Declines Despite Galaxy S26 Success

MX Division's Q1 Operating Profit at 2.8 Trillion Won
Down 34.88% Year-on-Year
Rising Memory Prices Drive Up Costs

While Samsung Electronics recorded its highest-ever quarterly earnings in the first quarter of this year, the Mobile Experience (MX) division did not share in the success. Due to the so-called "chipflation" effect, the division's operating profit fell by 35% year-on-year, remaining in the 2 trillion won range.

On the 11th, a citizen compares Samsung Electronics' smartphone 'Galaxy S26 Series' at the Samsung Gangnam Store in Seocho-gu, Seoul, on the day of its official release. March 11, 2026. Photo by Yonhap News.

On April 30, Samsung Electronics announced its first quarter results, revealing that the MX division's operating profit was 2.8 trillion won, a decrease of 34.88% compared to 4.3 trillion won in the same period last year. The division's sales reached 37.5 trillion won, up 3.59% from 36.2 trillion won a year ago and up 32.51% from 28.3 trillion won in the previous quarter, but this did not translate into increased operating profit.

The decline in profitability is attributed to increased cost burdens caused by soaring memory prices. Although the Galaxy S26 series, released early this year, showed solid sales led by the Ultra model, profitability declined due to the rapid chipflation.

In the first three weeks after its launch, the Galaxy S26 series achieved the highest sales in the history of the Galaxy S lineup in Korea, with sales volumes up 29% compared to the previous model. In the United States, the Ultra, the top-tier model, accounted for 71% of sales, contributing to revenue growth.

In response to the anticipated decline in new product effect in the second quarter, Samsung Electronics plans to increase the share of flagship models and drive sales growth with the new cost-effective Galaxy A series. A Samsung Electronics representative said, "We will respond to diverse customer needs by further advancing foldable product development, and promote growth across all product lines by expanding flagship sales and focusing on upselling. We will also pursue cost efficiency to minimize the impact of declining profitability," he added.

Meanwhile, Samsung Electronics posted its highest-ever first quarter results, driven by increased memory demand amid the spread of artificial intelligence (AI). On a consolidated basis, sales jumped 69.16% year-on-year to 133.8734 trillion won, while operating profit soared 756.10% to 57.2328 trillion won.

This content was produced with the assistance of AI translation services.