Comprehensive Assessment of the Impact of Soaring Memory Chip Prices on Samsung's Smartphone Business Profit Margins and Pricing Strategies in the Consumer Electronics Industry

The surge in memory chip prices is having a profound impact on the global consumer electronics industry. According to the latest market data [1],

on one hand, its semiconductor business benefits from profit growth driven by price increases; on the other hand, its smartphone business faces cost pressure.

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• DRAM and NAND flash prices have more than doubled since February 2025
  , with even higher increases in some segments
• Supplier DRAM inventory has sharply declined from 13-17 weeks at the end of 2024 to 2-4 weeks in October 2025
  , reaching a historic low
• Storage prices are expected to rise another 40% by Q2 2026
  , which will lead to an 8%-15% increase in smartphone BOM costs

• SK Hynix publicly stated that the memory shortage may last until the end of 2027
  , indicating the depth of this super cycle
• Samsung and SK Hynix’s HBM (High Bandwidth Memory) capacity has been basically sold out until 2027-2028
  , showing the severity of supply constraints
• Japanese electronics retailers have begun limiting SSD purchases per customer
  , reflecting supply tightness at the retail level

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In Samsung’s smartphone cost structure,

:

• Material costs for mid-to-high-end smartphones have risen by 10%-15%
  , mainly driven by memory price increases
• Storage accounts for a significant proportion of smartphone BOM (Bill of Materials)
  , so price increases directly impact profit margins
• Smartphone average selling price is expected to rise by 6.9% in 2026
  , but other measures are still needed to offset cost growth

1. Vertical Integration Advantage
   : As the world’s largest memory manufacturer, Samsung can gain certain flexibility in internal transfer pricing
2. Cost Pass-through Capability
   : High-end brand positioning allows it to pass part of the costs to consumers

• Galaxy S26 series, Z Fold 8 and Z Flip 8 have confirmed approx.10% price increase
  , directly hedging cost pressure
• Product portfolio optimization
  : Improve overall profit margins through high-end strategy to boost average selling price
• Supply chain management
  : Use vertical integration advantages to optimize memory allocation internally

Impact Dimension	Short-term Impact (6 months)	Mid-term Impact (12-18 months)	Long-term Impact (2+ years)
Mobile Business Gross Margin	Pressured by 1-2 percentage points	Gradually recover to normal levels through price increases	Benefit from product structure optimization
Overall Operating Margin	Limited impact (offset by semiconductor business)	Significant improvement (strong growth in semiconductor business)	Maintain high levels
Market Share	May slightly decline (after price increases)	Stable (strong performance in high-end market)	Remain stable or slightly increase

Samsung Electronics’ current financial situation provides a buffer for coping with cost pressure:

• Net profit margin:10.38%
  : Provides profit buffer space for the smartphone business
• Operating margin:9.51%
  : Shows core business remains profitable
• Current ratio:2.51
  : Sufficient liquidity supports business adjustments
• Q3 2025 EPS exceeded expectations by29.72%
  : Shows overall profitability is stronger than expected

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• Counterpoint Research predicts 6.9% increase in smartphone ASP in2026
• Material costs for mid-to-high-end models have risen by10%-15%, with storage prices as the main driver
• Low-end market faces greater pressure
  : Entry-level models are expected to return to4GB RAM configuration in2026

• Xiaomi17 Ultra has taken the lead with approx.10% price increase
• Samsung Galaxy S26 series confirms 10% price increase
• Apple is considering substantial price increases for its2026 product line

• Samsung and Apple are expected to maintain19% market share
  , with solid leading position
• Chinese OEMs face greater challenges
  : smaller profit margins and weaker cost pass-through capabilities
• Counterpoint analysts noted
  : “Apple and Samsung are best positioned to navigate the next few quarters, but others without the flexibility to adjust market share and margins like them will struggle. This will be particularly evident for Chinese OEMs this year.”

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[Image: Samsung stock price technical analysis]
Samsung Electronics’2025 stock price trend shows strong upward trend, with cumulative increase of127.51%, reflecting market optimism about the company’s dual business structure

• Semiconductor business profit surge
  : directly benefiting from DRAM and NAND price spikes
• Internal transfer pricing advantage
  : can optimize memory supply chain internally
• R&D synergy
  : storage and mobile businesses share technological innovation results

####5.2 Technological Leadership

• Samsung co-dominates the HBM market with SK Hynix
• HBM capacity has been sold out until2027-2028
  , ensuring long-term revenue growth
• AI-driven storage demand
  provides long-term growth momentum for Samsung

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####6.1 Impact on Different Market Segments

:-

• Minimal impact
  : consumers have low price sensitivity
• Brand value protection
  : Samsung and Apple are best able to maintain high-end positioning
• Continuous R&D investment
  : cost pressure will not significantly affect R&D input

:-

• Increased competition
  : price wars may reignite
• Product portfolio adjustment
  : vendors will balance cost and performance through configuration adjustments
• Market share competition
  : will be the focus of competition in2026

:-

• Greatest impact
  : extremely high price sensitivity and limited profit margins
• Configuration reduction inevitable
  : memory specifications will be the main adjustment target
• Chinese vendors face double pressure
  : weaker cost pass-through capabilities than Samsung and Apple

####6.2 Investment Recommendations

• P/E ratio:28.09x
  : in a reasonable range relative to historical levels
• P/B ratio:2.37x
  : reflects market