A forecast says the Mobile Experience (MX) and Networks divisions, which handle Samsung Electronics' smartphone business, will post a combined deficit totaling 24 trillion won over the three years from 2026 to 2028. The MX and Networks divisions' loss next year is expected to exceed the annual deficit recorded by the DS institutional sector (semiconductors) during the semiconductor slump in 2023.
According to the industry on the 9th, Samsung Securities changed its estimate for Samsung Electronics' MX and Networks divisions' results for this year in a report on the 8th from "operating profit of 3.41 trillion won" to "operating loss of 5.841 trillion won."
Samsung Electronics releases combined results for the MX and Networks divisions, of which MX accounts for 96% to 98% of the divisions' revenue. Most of the operating profit also comes from MX.
Samsung Securities projected the operating loss of Samsung Electronics' MX and Networks divisions will widen further in 2027 to 15.209 trillion won. That would exceed the annual deficit (14.88 trillion won) recorded by the DS institutional sector during the 2023 semiconductor downturn. Samsung Securities also projected the MX and Networks divisions would log an operating loss of 3.237 trillion won in 2028, bringing the total deficit for the three years from 2026 to 2028 to 24.287 trillion won.
However, Samsung Securities expects Samsung Electronics to continue at record-high profitability as the DS institutional sector is projected to book operating profit of 380.571 trillion won in 2026, 579.413 trillion won in 2027, and 599.185 trillion won in 2028.
The outlook came right after Samsung Electronics announced its second-quarter results on the 7th. Brokerages are issuing analyses after the company's second-quarter announcement saying, "The MX division's results are worse than expected." Samsung Electronics has not yet disclosed division-by-division results, but based on memory prices and shipments, DS institutional sector profit was better than expected; by working backward from that, analysts say MX institutional sector results were worse. For the second quarter this year, Samsung Electronics posted revenue of 171 trillion won and operating profit of 89.4 trillion won, marking a record high for the third straight quarter.
IBK Securities revised its view for the MX and Networks divisions in the second quarter this year from an operating profit of 342 billion won to an operating loss of 526 billion won. Samsung Securities analyzed that the MX division recorded an operating loss of 1.4 trillion won in the second quarter this year. Eugene Investment & Securities also estimated a 1 trillion won operating loss for the MX and Networks divisions in the second quarter this year. If the estimates hold, the MX division will post a quarterly loss for the first time since its launch. Even during the Galaxy Note 7 recall incident in the third quarter of 2016, the MX division posted 100 billion won in operating profit.
Lee Jong-uk, an analyst at Samsung Securities, said, "We move up the timing of MX turning to a loss from the fourth quarter of 2026 to the second quarter of 2026," and noted, "As higher DRAM prices began to be fully reflected in costs from the second quarter this year, the MX division's cost ratio appears to have risen and profitability started to decline." Son In-jun, an analyst at Eugene Investment & Securities, analyzed, "With the off-season coinciding with a surge in memory prices, the MX division appears to have faced a faster-than-expected turn to loss."
With the spread of artificial intelligence (AI) driving a surge in demand for DRAM and NAND, memory prices have risen sharply, increasing smartphone cost burdens as well. According to Counterpoint, memory's share of the manufacturing cost for an $800 (about 1.2 million won) smartphone expanded from 14% in the first quarter last year to 40% in the second quarter this year. Major market research firms project the memory supply shortage is likely to continue through 2027.
Samsung Electronics is responding to higher memory prices by raising prices across the Galaxy lineup. In March, it launched the Galaxy S26 and raised the price by about 100,000 won (based on 256GB) compared with the previous model, and in April it raised the factory prices of high-capacity models released within one year (Galaxy Z Flip7, Fold7, S25 Edge). However, with replacement cycles lengthening and demand slowing, large price hikes directly translate into lower sales volume, and it is especially difficult to defend with price increases in the mid-to-low-end market, where Chinese competitors such as Huawei and Xiaomi are present.