Update 2:Samsung Taiwan later stated that the fogging issue with the Galaxy S26 Ultra lens is currently an isolated case, and customers can contact customer service for assistance if they have any questions.
Updated:Samsung has not responded to this report, nor has it commented on the fogging issue with the Galaxy S26 Ultra's camera lens. Samsung Taiwan stated that it could not provide an answer.
Samsung is currently facing an unprecedented "double whammy" challenge. While its semiconductor (DS) division is poised for record-breaking performance due to soaring memory prices driven by the AI boom, its device experience (DX) division, under the same umbrella, is struggling due to the same memory price surge.Severe business crisisThe Mobile Experience (MX) division, responsible for the Galaxy series of mobile phones, was forced to enter "emergency management mode" due to out-of-control costs, despite record-breaking pre-orders for the flagship Galaxy S26 series. It may even face its first operating loss since the company's inception.
Even the phenomenal sales of the Galaxy S26 series couldn't save the day: profit margins may plummet to 1%.
Market research shows that the Galaxy S26 series, especially the top-of-the-line Galaxy S26 Ultra, has seen enthusiastic pre-orders since its launch, even breaking previous records. However, this sales boom cannot withstand the enormous pressure from upstream costs. According to South Korean media FNNews, due to a sharp rise in semiconductor component procurement costs, the MX division has been in emergency mode since the end of February this year.
Data shows that memory prices have surged by over 850% in the past year, directly leading to a rapid compression of product profit margins. Market estimates predict that the MX division's operating profit will plummet from 12.9 trillion won in 2025 to 5 trillion won in 2026, a drop of over 60%.
What's even more worrying is its profitability. Last year, it had a profit margin of 11% in the first quarter, but this year it may be halved to 3% in the same period, and may even drop to 2% in the second quarter. There are even more pessimistic voices from within Samsung: "It may be difficult to even achieve a profit margin of 1%."
Semiconductor inflation is the culprit: the more you sell, the less you earn?
At the heart of this crisis lies the fact that "the money earned by its own wafer fabs was swallowed up as costs by its own mobile phone division." With the explosive growth of investment in AI infrastructure, the market demand for high-bandwidth memory (HBM) and DRAM components is extremely strong, causing semiconductor prices to soar. While Samsung's semiconductor division benefits from this, for its MX division, which is part of the same group, it means that it must purchase core components from its "siblings" at higher prices.
Reports indicate that Samsung's semiconductor division successfully doubled the price of memory chips for the iPhone 17 series when negotiating with Apple, even securing a firm "all-inclusive" deal. Subsequently, the semiconductor division adopted a similar price increase policy for its internal MX division. Although the increase was slightly lower than the external price quote, it still instantly worsened the cost structure of the mobile phone division.
At the same time, the recent turmoil in the Middle East has also driven up oil prices, further increasing overall logistics costs, which in turn has led to higher operating expenses for the MX division.
Although Chen Qimeng, General Manager of Samsung Taiwan's Mobile Communications Business Division, said in a recent interview...displaySamsung possesses a highly integrated vertically integrated supply chain for components. Compared to its competitors, Samsung is more resilient and has a competitive edge in the market when facing future component shortages or cost shocks. However, overall, Samsung's DX division still faces considerable pressure.
Emergency mode activated to the maximum: Executives fly economy class on business trips, departments downsize by 30%.
In response to this sudden shock, Samsung has ordered all business units within its DX division to cut operating costs by 30%. This order has translated into a series of concrete and symbolic austerity measures:
• Demotion of executives for business trips: In the past, executives below the vice president level could travel in business class as long as the flight time was less than 10 hours, but now they are all uniformly changed to economy class regardless of the distance of the destination.
• Human Resources Restructuring: Industry insiders expect the MX division to follow the example of the TV (VD) division by restructuring its job positions and even expanding its "voluntary departure" program, thereby accelerating human resources optimization by relaxing application requirements and increasing severance pay.
A Samsung official revealed, "Raw material prices are under immense pressure due to soaring semiconductor prices, coupled with rising logistics costs. We have no choice but to place the MX division under emergency management."
New device quality crisis: Galaxy S26 Ultra lens fogging issue erupts
Caught between cost pressures and an emergency management mode, Samsung's highly anticipated flagship Galaxy S26 Ultra has been plagued by embarrassing quality controversies early in its release. According to reports from multiple tech media outlets and social media platforms, some Galaxy S26 Ultra users have experienced fogging inside the camera lens under certain conditions, resulting in blurry images and severely impacting the user experience.
A test video shared on social media platform X shows that when the phone is exposed to a temperature of -6 degrees Celsius, the 3x and 5x telephoto lenses of the Galaxy S26 Ultra completely fog up inside. Similar complaints have also appeared on Korean social media forums, indicating that this may not be a defect in a single production batch, but rather an underlying design or quality control issue that needs to be addressed.
Additionally, Taiwanese users have also reported similar issues on the PTT mobile forum in Taiwan.Similar situationsOne netizen tested the device and found that when the car's air conditioning was set to 20 degrees Celsius and the outside temperature was about 27 degrees Celsius, the phone's lens fogged up to 100% of the time. The netizen stated, "I can't accept this quality. It's not like it's from -27 degrees Celsius. The fogging is caused by the temperature difference between the inside and outside of the car; in summer, the temperature difference is even greater. Won't it fog up frequently when you go in and out?" The netizen decided to return the phone. Another netizen pointed out that this fogging phenomenon might be due to improper temperature and humidity control in the assembly factory, causing moisture inside the phone to condense on the inside of the lens glass when the temperature changes drastically.
Although Samsung has not yet issued an official comment on the incident, given that the Galaxy S26 Ultra bears the heavy responsibility of penetrating the high-end market in a challenging revenue environment, this quality controversy undoubtedly adds insult to injury. Some commentators believe that if the fogging issue is confirmed to be a structural defect, Samsung may face the cost pressure of large-scale after-sales repairs or even recalls, further eroding its already thin profit margins.
Overdrawn historical credibility: The lingering shadow of the green line issue on the screen
In addition to the new issue of lens fogging on the Galaxy S26 Ultra, Samsung's "historical problem" with mobile phone screen quality over the past few years continues to fester. From the Galaxy S20, S21 to the S23 series, users have experienced issues after software updates.Vertical green lineCases of this kind are emerging one after another, and are often regarded as disputes outside of "non-human damage".
Recently, numerous Galaxy S23 series users on Samsung's official forums have reported that after installing the official software update for January 2026, a green line instantly appeared on their screens. Users generally complain that their phones are in good working order, undamaged, and the problem is clearly a screen panel defect caused by the official update.
One user pointed out that although Samsung India had launched a free replacement program, the deadline was December 31, 2025. His phone only developed the problem after an update on January 1, 2026, raising questions about whether Samsung should consider making an exception. Later, another user replied that the free replacement program had been extended to June 2026. However, such "hidden" repair programs (like the "NT$1200 screen replacement" program circulating in Taiwan) often require testing and a determination that the damage is not caused by human error to be eligible. Samsung has never officially announced this, leaving consumers in a vulnerable position due to information asymmetry.
Even more worrying is that the green line issue appears to be more than just an isolated case. Some users have posted on forums that multiple family members who purchased the same model of phone all developed the green line, with some even experiencing a second recurrence. This not only damages the brand's reputation but also gradually erodes the confidence of loyal customers.
Semiconductor inflation isn't just a Samsung issue: collective pressure on the mobile phone industry.
Samsung's predicament is not an isolated incident, but a microcosm of the entire mobile phone industry. With soaring semiconductor prices, all brands reliant on external sourcing are facing survival pressures.
• The Dilemma of Chinese Brands: Chinese manufacturers such as Xiaomi, OPPO, vivo, and Honor mainly rely on mid-to-low-end models to boost sales volume, resulting in weaker ability to pass on costs. Xiaomi President Lu Weibing had previously warned that memory chip price increases would continue until the end of 2027, inevitably being reflected in terminal prices. Meizu even canceled its new phone launch plans as a result and announced a suspension of new phone development in China, shifting its focus to AI software business.
• Apple remains highly resilient: Leveraging its self-developed A-series processors and long-term agreements with its supply chain, Apple demonstrates strong resilience through exceptional bargaining power. Reports indicate that prior to the price surge, Apple had already signed long-term supply contracts with its suppliers. Although the new agreements still resulted in a 100% price increase, they maintained a relatively advantageous cost compared to the soaring prices in the spot market.
Analysis: The hardware war is dead; the ecosystem war must begin.
Samsung's MX division's current crisis is a classic example of "success backfiring." For a long time, Samsung's vertically integrated supply chain has allowed it to profit greatly during memory bull markets and clear inventory through end-product sales during bear markets. However, this AI-driven memory supercycle has turned this advantage into inter-departmental "struggle."
This also reveals that the mobile phone industry's "cost transfer capability" has reached its limit. When simple hardware upgrades (higher capacity memory, higher performance processors) become the culprit for eroding profits, brands must rethink their value.
The key to future success lies not in who can cram in the largest memory, but in who can provide better hardware and software integration and an enhanced ecosystem experience. Apple's success lies in its closed ecosystem, which makes users willing to pay for the brand and its services. Chinese brands are actively shifting their focus to AI phones and foldable phones, attempting to carve out new avenues through "form-factor innovation" and "smart services."
For Samsung, whether its current "emergency mode" is a short-sighted, desperate measure or the beginning of sweeping reforms will determine whether it can maintain its dominant position in the future "AI terminal wars." Otherwise, when the profit from selling mobile phones is lower than that of depositing money in a bank, this former king will likely fade away amidst the wave of hardware inflation.
Secondly, the "emergency mode" could exacerbate the vicious cycle of lax quality control. The timing of the Galaxy S26 Ultra's lens fogging incident coincided with the MX division's activation of emergency management and large-scale cost-cutting. While it cannot be definitively stated that there is a direct causal relationship between the two, when a department is forced to cut spending by 30%, and even executives have to be downgraded from business class to economy class for business trips, resource constraints in its R&D, testing, and quality control processes are foreseeable.
Given such stringent cost control, it's questionable whether the product's sealing performance under extreme temperature variations was compromised.
Furthermore, the erosion of historical credibility is diminishing Samsung's brand trust. From the green line controversy on the screen to lens fogging, quality issues with key components have plagued Samsung almost every year. Even more problematic is its after-sales service attitude—the popularity of the term "cold bamboo shoot" (meaning consumers have to pay for non-human-caused damage) on social media is a direct expression of dissatisfaction with Samsung's after-sales policy. When a brand is labeled as "quality depends on luck, repairs depend on luck," the foundation of its premium positioning begins to crumble.
