Samsung Electronics' Mobile Experience division is set to implement a substantial reduction in smartphone production, with plans to cut output by up to 30% in the fourth quarter of 2026. The company has already informed its partners of the need to scale back product supply by 20% to 30%. Initially, Samsung had set an ambitious target of producing 270 million smartphones for the entire year. However, owing to the production cutback in Q4, the annual output is now projected to plummet to just over 200 million units, a decline that surpasses market expectations.

Traditionally, Samsung experiences a seasonal dip in production during the fourth quarter, as consumers tend to hold off on purchases in anticipation of new model releases. Earlier, IDC had forecasted a roughly 12% decrease in shipments from Q3 to Q4 for this year. Nevertheless, the magnitude of this year's production cut is notably more severe.

The primary catalyst behind this production cut is the escalating cost of memory chips. Propelled by a surge in demand from the artificial intelligence sector, memory prices have been on a relentless upward trajectory, rendering Samsung's smartphone sales unprofitable. In light of these circumstances, reducing production has emerged as a strategic move to safeguard the company's overall profitability.