[News] Samsung Reportedly Asks Execs to Fly Economy as Mobile Risks Worst-Ever Q1 on Memory Costs

Samsung Electronics is reportedly stepping up cost-cutting efforts within its Device Experience (DX) division, which oversees its smartphone business as well as TVs and home appliances. According to Hankyung, industry sources say the DX division is reviewing a range of cost-reduction measures under the chief financial officer (CFO). One of the initial steps includes cutting overseas travel expenses for executives, including airfare. Currently, executives at the vice-president level and below are allowed to fly business class or higher on international trips, but under the new policy they will be required to travel in economy class.

As the report notes, Samsung Electronics’ DX division has begun lowering airfare standards for executives on overseas business trips amid forecasts that its first-quarter performance this year could drop to the “worst level on record.” Industry observers cited in the report say the Mobile Experience (MX) business unit, which oversees Galaxy AI smartphones, may post an operating loss for the first time in the company’s history.

While Samsung Electronics’ overall operating profit—including the Device Solutions (DS) semiconductor division—is projected to surpass 40 trillion won in the first quarter for the first time on record, the report notes that the DX division alone is expected to face pressure, as rising component costs, including memory semiconductors, weigh on profitability. Other cost-cutting steps may involve easing eligibility for DX division voluntary retirement programs, potentially expanding the applicant pool, the report says.

Rising memory costs are expected to weigh on the outlook for smartphone shipments. According to TrendForce, global smartphone output is projected to decline by at least 10% year over year in 2026 to around 1.135 billion units. TrendForce also notes that memory, which historically accounted for about 10–15% of a smartphone’s bill of materials (BOM), has now risen to roughly 30–40%.

Samsung Weighs Overinvestment Risks Amid AI Memory Boom

Meanwhile, apart from the cost-cutting measures initiated by its DX division amid forecasts that rising memory costs could weigh on its smartphone business, Samsung is also closely watching the risk that the current memory boom could trigger overinvestment. According to Chosun Biz, sources say Samsung Electronics’ DS division management and its business support office are evaluating the possibility of a global memory semiconductor market downturn starting in 2028. As a result, maximizing profitability during the AI-driven boom while limiting overinvestment risks has become a key challenge, with improving operational efficiency emerging as a top priority.

This means that even as large-scale investments continue in next-generation HBM production lines, companies must also prepare for the possibility of unexpectedly weak demand. Analysts cited by the report note that following the AI boom, memory demand has become more volatile and supply cycles have shortened, making it increasingly difficult to accurately forecast production volumes and investment needs.

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(Photo credit: Samsung)