Rising memory chip costs driven by artificial intelligence infrastructure demand are forcing Samsung to slash its smartphone production by up to 30 percent in the final quarter of the year, threatening to impact device markets worldwide.
Samsung Slashes Smartphone Production As Component Costs Skyrocket
Market research firm IDC anticipated Samsung’s output would moderate, marking a roughly 12 percent dip. Instead, Samsung’s Mobile Experience division has initiated a major production rollback for the final three months of the year, instructing component suppliers to cut shipments by 20 to 30 percent, according to reports from the South Korean outlet Money Today cited across industry analyses.
Industry sources noted that Samsung’s smart devices are currently selling without generating any profit at all upon sale due to the skyrocketing cost of memory and semiconductors. Manufacturing fewer units helps protect the corporation’s overall financial balance sheet against mounting operational losses.
Artificial Intelligence Infrastructure Reconfigures Global Semiconductor Supply
Data centers running sophisticated language models demand vast quantities of High Bandwidth Memory (HBM
), which operates alongside advanced processors to handle intensive parallel computations. The relentless expansion of generative artificial intelligence requires massive clusters of specialized hardware, drawing semiconductor manufacturing capacity away from consumer electronics.
According to data from market research firm TrendForce, the price of a 12GB LPDDR5X mobile memory chip reached between $145 and $146 during the second quarter, representing a staggering increase compared to the previous year, with summer prices climbing toward $180 per unit. Because manufacturers utilize the same silicon fabrication lines and wafer capacities for both HBM and standard dynamic random-access memory (DRAM
), the stampede for artificial intelligence hardware has constricted supplies for phones, tablets, and consumer PCs.
Micron and Industry Giants Warn of Constraints Persisting Through 2028
Micron Chief Executive Officer and Chairman Sanjay Mehrotra warned that supply and demand conditions will remain severely constrained throughout 2027 and 2028, noting that the company has already booked out the vast majority of its anticipated memory production for the upcoming year.
While major suppliers are investing heavily to expand fabrication footprints—including Micron’s planned capital expenditures for new factories—constructing and equipping advanced semiconductor plants requires extensive lead times. Micron emphasized that bringing new factories online in 2028 will not immediately resolve pricing pressures or consumer availability.
Global Price Increases Threaten Affordable Mobile Devices and Internet Access
IDC data indicates that shipments of smartphones priced below $150 were expected to exceed 25% of total global shipments by 2025, but this segment is shrinking rapidly. Analysts point out that device makers are abandoning low-margin entry-level projects in favor of premium models where profit margins can better absorb skyrocketing component expenses.
Huawei warned that the increase in memory chip costs could extend to the final consumer through higher phone prices. Meanwhile, there are concerns that as AI expands into more essential services, the gap in smartphone ownership could turn into a new form of digital divide.
