Unlike Samsung Electronics' (005930.KS) semiconductor (DS) division, which posted record earnings, its finished-goods (DX) division, including smartphones and home appliances, saw second-quarter operating profit plunge below 1 trillion won, according to reports. Soaring memory prices boomeranged to reduce smartphone sales profits, while home appliances could not escape the impact of weak demand and rising raw material prices. There are growing concerns that the earnings polarization could deepen tensions between labor groups in the DS and DX divisions stemming from disparities in performance-based bonuses.
According to financial information provider FnGuide on Monday, Samsung Electronics' DX division is estimated to have posted second-quarter operating profit of less than 1 trillion won. Brokerages estimated the figure at between 400 billion won and 900 billion won, while Daishin Securities and Meritz Securities, which issued reports immediately after the earnings announcement that day, even raised the possibility of an operating loss exceeding 1 trillion won.
This marks a sharp decline compared with previous quarterly results. While the second quarter is considered an off-season with no new Galaxy smartphone releases, Samsung Electronics' DX division still posted 3.3 trillion won in operating profit in the second quarter of last year. It also held up well with 3 trillion won in the first quarter of this year.
The industry attributes the deteriorating profitability to the off-season combined with a sharp increase in the memory cost burden for smartphones. According to market research firm Counterpoint Research, the share of memory in smartphone costs grew from 14% in the first quarter of last year to as much as 40% recently.
In response, Samsung Electronics is reportedly set to raise the price of its "Galaxy Z8" foldable phone series, to be unveiled this month, following the "Galaxy S26." TVs and home appliances have also faced a heavier raw material cost burden amid the war in the Middle East.
As the earnings gap with DS widens, discontent among DX employees is growing. Donghaeng, the Samsung Electronics labor union centered on DX employees, plans to hold a rally of up to 3,000 people near the Suwon business site on the 16th.
The company intends to overcome the crisis by entering new businesses in artificial intelligence (AI) and robotics. It recently decided to build a physical AI hub in Gumi, North Gyeongsang Province, including a 19 trillion won humanoid robot mass production line. By 2030, it plans to convert all of its production plants at home and abroad into "AI autonomous factories" and deploy humanoid robots.
