Samsung Faces Record AP Procurement Costs as Exynos Becomes Its Best Lifeline

Samsung Electronics is on track to record its highest ever spending on mobile application processors this year, with procurement costs nearing 11 trillion won. As memory prices continue to surge and pressure mounts on smartphone margins, analysts say the company has little choice but to accelerate adoption of its in-house Exynos chips.

AP Purchases Near 11 Trillion Won as Cost Burden Rises

According to Samsung’s third quarter earnings report released on November 14, the company spent 10.9275 trillion won on mobile APs in the first nine months of the year. The figure represents a 3.1376 trillion won increase from the first half and a 25.5 percent jump from a year earlier. APs accounted for 19.1 percent of total raw material costs for the DX (Device eXperience) division, up from 16.6 percent, both record highs.

Foldable Lineup and Rising Component Prices Add Pressure

This year’s Galaxy Z Fold 7 uses Qualcomm’s Snapdragon platform, a factor that contributed to higher procurement spending. The Galaxy Z Flip 7, in contrast, adopted Samsung’s own Exynos 2500. Mobile APs make up more than 30 percent of a smartphone’s bill of materials, and prices have climbed across the industry this year. Samsung reported that average AP solution prices in the third quarter were about 9 percent higher than last year.

AI Boom Drives Memory Shortages and Sharp Price Increases

The surge in AI infrastructure investment has shifted production capacity toward high bandwidth memory, creating shortages in conventional DRAM for smartphones and PCs. TrendForce recently raised its fourth quarter DRAM price outlook from 8 to 13 percent to a new range of 18 to 23 percent. While soaring memory prices benefit Samsung’s semiconductor division, they pose a direct threat to profitability in the DX smartphone business.

Exynos Seen as the Key to Cost Defense, S26 to Use New 2600 Chip

To strengthen cost competitiveness, Samsung plans to equip next year’s Galaxy S26 series with the Exynos 2600. The chip is designed by Samsung’s System LSI unit and manufactured by the company’s foundry. It is expected to be more cost-efficient than Qualcomm’s upcoming flagship processor. With AP supply expected to tighten further due to continued AI investment, industry observers say expanding Exynos adoption is becoming essential for Samsung’s profits in its mobile business.

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