Samsung faces first potential smartphone loss as AI chip demand drains memory production capacity

Samsung executives warned internally that the company could post an operating loss on smartphone sales for the first time, because AI data centers are consuming so much memory chip production that smartphone component supplies have tightened and prices have fallen.

The shortage works backward: AI companies (like those building large language models) are buying up all available high-end memory chips (HBM and advanced DRAM), leaving Samsung with less capacity to make the memory and processors that go into phones—and when supply shrinks while demand stays steady, prices drop, squeezing profit margins on each device sold.

If Samsung's smartphone division actually reports a loss, it signals that the AI boom is reshaping hardware manufacturing globally: companies that bet on data-center chips over consumer devices are winning, while traditional phone makers face a choice between accepting lower profits or exiting the market entirely. This matters to anyone buying a phone next year—it could accelerate Samsung's shift toward premium-only models, making affordable flagships rarer.