Samsung Prioritizes Market Share Over Profits Amid Mobile Division Losses
The tech giant is pushing shipment volumes to capture market share despite a 700 billion won loss in its mobile unit.
Samsung Electronics is pivoting its mobile strategy to prioritize shipment volumes and market-share expansion over immediate profitability for the second half of the year. The move comes as the company faces a severe profit squeeze in its handset business driven by escalating component costs.
Roh Tae-moon, Samsung's co-CEO and head of the Mobile eXperience division, has directed the company to focus on volume growth despite a challenging financial landscape. In the second quarter, Samsung's Device eXperience (DX) division—which encompasses smartphones, TVs, and home appliances—recorded an operating loss of approximately 800 billion won. The Mobile eXperience and Networks division alone accounted for about 700 billion won of that loss, a striking result given that the unit actually saw a 14% year-on-year increase in revenue.
A Divided Financial House
This downturn in the mobile sector stands in stark contrast to the company's semiconductor business. Samsung's Device Solutions (DS) division, which manages its chip production, generated a massive 89.2 trillion won in operating profit during the second quarter. This internal divide is largely the result of rising memory component costs; while these prices are driving record profits for the DS division, they are simultaneously eroding the margins of the mobile division.
An industry official noted that the mobile business did not fall into the red due to a lack of demand, stating that sales grew, but memory costs rose faster than revenue could keep pace. This creates a paradoxical situation where the company's own success in the semiconductor market is contributing to the financial struggle of its smartphone wing.
The Volume Gamble
Despite the losses, Samsung currently holds a dominant position in the global market. In the second quarter, Samsung led global smartphone shipments with a 24% share, outpacing Apple's 20%. This leadership comes during a period of broader industry decline, as global smartphone shipments fell 11% year-on-year in Q2, marking the weakest second quarter for the industry since 2013.
By maintaining high volumes while other competitors either raise prices or reduce production to protect their margins, Samsung aims to capture a larger slice of the market. Shilpi Jain, a senior analyst at Counterpoint Research, observed that while some competitors are accepting margin pressure through price hikes and others are pulling back on launches, Samsung is doubling down on availability.
Future Outlook
To sustain this momentum, Samsung is preparing to expand its hardware lineup. The company plans to unveil a new member of the Galaxy S26 family on August 27, a device widely expected to be the Galaxy S26 FE.
Whether this volume-first strategy can offset the rising cost of components remains to be seen. The company must now balance its aggressive pursuit of market share against the risk of deepening losses in the DX division, all while managing the internal tension created by the vast profit disparity between its chip and mobile businesses.