Samsung Electronics Co. is projected to post record earnings on the back of soaring memory chip prices, but the rally is creating a new headache for its smartphone division as production costs climb ahead of next year’s flagship launch.

If Samsung Electronics raises smartphone prices to match the higher memory costs, the Device Solutions (DS) division may see improved results but the Mobile eXperience (MX) division, which makes smartphones, could see its revenue and profitability worsen instead.

Samsung Electronics is reportedly deliberating over the pricing of its upcoming Galaxy S26, set for release in February next year.

In addition to rising memory prices, the cost of Qualcomm’s smartphone application processors has increased, adding further pressure on production costs.

In the third quarter, Samsung Electronics paid Qualcomm about 11 trillion won ($7.5 billion) for AP purchases, up 25.5 percent from the previous year.

Samsung Electronics plans to equip the base and Plus models of the Galaxy S26 with its in-house Exynos 2600 chip, but the top-tier Ultra model will feature Qualcomm’s Snapdragon 8 Elite 5G.

For the Korean market, a high exchange rate has become another burden, as it pushes up the import cost of Qualcomm’s Aps.

This creates a major variable for Samsung’s MX division, which set an ambitious sales target of 130 trillion won this year following the success of the Galaxy S25 and Galaxy Z Fold 7.

“Manufacturers are debating whether they can pass rising costs on to consumers,” said an industry insider. “Samsung Electronics has maintained price stability for years under the leadership of President Roh Tae-moon. Whether it can continue that next year is the big question.”

There are positive signs for Samsung Electronics.

The Exynos 2600, designed by System LSI division, has shown strong benchmark performance, while Qualcomm’s Snapdragon 8 Elite 5G has been reported to have overheating issues in early devices.

This presents an opportunity for Samsung to improve the negative image many consumers have had toward Exynos chips.

The mobile-focused media outlet Android Authority recently reported that the OnePlus 15, equipped with the Snapdragon 8 Elite 5G, experienced overheating during a high-intensity stress test.

The Exynos 2600 – manufactured using Samsung’s 2nm process – is showing relatively solid benchmark results.

The domestic retail market, in the meantime, is already bracing for higher handset prices next year. Retailers are warning customers that major models from Samsung Electronics and Apple Inc. are likely to become more expensive.

“Chip prices have risen, and the exchange rate is pushing up costs,” said an employee at a SK telecom Co. store. “Keeping prices flat will be difficult.”

He noted that Apple’s iPhone 17 Pro launched about 100,000 won higher than its predecessor, and Samsung Electronics is likely to follow the trend.

With uncertainty surrounding next year’s pricing, some retailers say this year may be the last chance for consumers to buy a smartphone before significant increases.

“We don’t know how much more expensive next year’s Galaxy S26 or Galaxy Z Fold8 will be,” said another dealer.

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