Samsung, a major beneficiary of rising memory prices, finds its mobile division particularly vulnerable to this inflation. While its semiconductor division profits from increased sales of DRAM, NAND, and server memory, the mobile division relies on these same components for its Galaxy smartphones, tablets, laptops, and other consumer devices. The escalating cost of memory is driven by the immense demand from AI data centers, which are absorbing production capacity and offering higher prices to secure supply.
According to reports from Techmaniacs, Samsung plans to increase device prices by €100 to €200 starting in June. This price hike is expected to affect the entire Galaxy S series, Galaxy Z Fold 7, Galaxy Z Flip 7, and FE models. All of Samsung’s flagship devices will see a price increase of at least €100. Furthermore, as device storage and RAM capacity increase, so will the price increase. Consequently, more basic phones with less RAM and storage will experience a more modest price rise.
Samsung had previously lowered smartphone manufacturing costs, but with memory prices continuing to climb, they now need to increase profit margins.
In Samsung’s specific case, the company is not solely considering price increases. It is engaged in a more aggressive strategy to control costs on other components. For instance, it’s notable that Samsung has begun using OLED panels from CSOT, a subsidiary of the Chinese company TCL. This move was initially applied to devices like the Galaxy A57, foregoing its own Samsung Display OLED panels. CSOT offered flexible OLED panels at a lower price than Samsung Display. This strategy is being implemented at a time when Samsung needs to enhance the design of its mid-range devices without drastically increasing the final cost.
This strategy extends beyond displays. Samsung has also reportedly changed the hinge supplier for the Galaxy Z Flip 7, switching from South Korea’s KH Vatec to China’s Huanli. Additionally, some ultra-wide-angle camera modules for the Galaxy S series are said to be sourced from Chinese suppliers. The implication is clear: Samsung devices are increasingly incorporating Chinese components, yet they are becoming more expensive. The current challenge is that relying on these Chinese suppliers for better pricing is no longer sufficient. The cost of RAM, NAND, and even processors has risen. Consequently, the company can no longer absorb these increases and faces reduced sales, which will likely lead to a cooling of demand for its devices.
The Galaxy A series is particularly crucial in this scenario. While the spotlight often shines on the Galaxy S and Galaxy Z lines, the Galaxy A series is essential for competing in price-sensitive markets such as India, Southeast Asia, Latin America, and parts of Europe. Samsung views this range as vital for regaining ground against Apple and Chinese brands. Therefore, a significant price increase for these models could further weaken their competitiveness. Adding to this, Samsung is pushing AI integration into its devices, which requires more RAM. This presents a flawed strategy for the mid-range and budget segments when considering pricing implications.
