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| Samsung Galaxy S26 Ultra image render. |
A corporate struggle between Samsung's most profitable division and its flagship phone team could leave consumers with a more expensive—or less impressive—Galaxy S26.
A silent but fierce internal battle is raging within Samsung Electronics, pitting its immensely profitable semiconductor arm against its mobile division. The outcome of this conflict may directly impact the price tag and specifications of the upcoming Galaxy S26 series, potentially forcing Samsung to choose between raising prices or cutting corners on upgrades.
The Semiconductor Juggernaut: Driving Record Profits
At the heart of the tension is Samsung's Device Solutions (DS) division, the manufacturer of memory chips and Exynos processors. This unit is poised to be the primary engine behind what some analysts predict could be a staggering $69 billion in operating profit for Samsung in 2026. The division is riding an unprecedented wave of demand for high-performance memory, especially the High Bandwidth Memory (HBM) used in AI accelerators and graphics cards.
Reports indicate that Samsung DS is in a position to charge Nvidia double for its next-generation HBM4 chips, a testament to the insatiable appetite of the AI industry. This profitability focus, however, is creating ripple effects across the entire tech ecosystem. As noted in a Hankyung business report, the AI boom is absorbing capacity for various memory types, not just HBM.
The Mobile Division's Dilemma: Pay Market Price or Compromise
Samsung's Mobile Experience (MX) division, responsible for the Galaxy S series, is learning this new reality the hard way. According to industry tips, the DS division has rejected a long-term supply contract for the LPDDR mobile memory chips needed for the Galaxy S26. This type of contract typically locks in stable pricing and helps control manufacturing costs.
Instead, in a move reflecting Samsung's recent corporate restructuring that grants divisions more autonomy over profitability, DS has reportedly only offered MX a quarter-by-quarter supply agreement. This means the mobile division must buy memory at prevailing market prices, which have soared. As discussed in a Seoul Economic Daily analysis, with AI accelerators now consuming LPDDR capacity alongside HBM, the DS division is restructuring its portfolio purely for profit maximization.
The Math Behind the Potential Galaxy S26 Ultra Price Hike
The financial impact on the Galaxy S26 is becoming clear. With memory spot prices having doubled, the share of memory costs in the phone's total Bill of Materials (BOM) is expected to rise to 20%. This elevates memory to the cost level of the mobile application processor, historically the most expensive component in a smartphone.
Faced with this refusal for a fixed-cost contract, the MX division has two unappealing options: increase the Galaxy S26, S26+, and S26 Ultra prices or scale back on planned specification upgrades. Current indications suggest the latter path is being chosen.
A Middling Upgrade on the Horizon?
The Galaxy S26 Ultra, in particular, is now rumored to be shaping up as a conservative update. Major leaps in display technology, camera sensors, or base memory capacity may be sidelined. The phone's primary selling points might be reduced to a cosmetic redesign for a more elegant feel and the exclusive use of the Snapdragon 8 Elite Gen 5 chipset in all markets.
This cautious approach could allow Samsung to maintain a starting price of $1,299 for the S26 Ultra. However, with the current Galaxy S25 Ultra already available for under $900 on platforms like Amazon, the value proposition of the new model will face intense scrutiny. Consumers may question whether minor aesthetic changes and a new chip are enough to justify an upgrade, especially if other areas see stagnation.
A Wider Industry Warning
This internal conflict at Samsung echoes a broader warning from industry leaders. Tim Sweeney, CEO of Epic Games, and other executives have cautioned that rampant price hikes for core components threaten the consumer electronics landscape. As AI giants like Nvidia and hyperscalers willingly pay exorbitant sums for advanced memory, it squeezes the supply and budgets for laptop, PC, console, and phone makers.
The situation underscores a pivotal moment for Samsung. It must navigate the balance between capitalizing on a historic semiconductor boom and protecting the competitiveness and appeal of its flagship consumer brand. The Galaxy S26 series may become the first concrete product to reveal which priority ultimately wins out.
For further reading on the semiconductor pricing dynamics, see this industry discussion on social media.