A Samsung Electronics Logitech engineer performs cleaning work on a commercial system air conditioner. Photo courtesy of Samsung Electronics
Repair costs for Samsung Electronics home appliances, including air conditioners, and mobile products are expected to rise this summer. As prices for raw materials, including memory, surge, the cost of new parts and other materials needed for repairs is following suit.
According to industry sources on the 13th, Samsung Electronics (005930.KS) raised the cost of repair materials supplied to Samsung Electronics Service, its subsidiary dedicated to after-sales (AS) and repair services, earlier this month. Material costs for digital appliance (DA) products, including air conditioners, rose an average of 9 percent, while products from the Mobile eXperience (MX) division, such as smartphones, rose an average of 5 percent. Parts subject to the increase included mobile phones and display panels, as well as motors and compressors for home appliances.
Given that materials account for 80 to 90 percent of repair costs, this increase in material costs makes a rise in repair costs unavoidable. This marks the second time Samsung Electronics has raised repair material costs this year, following an increase in January. The move reflects declining profitability in repair services as memory costs, along with various raw material prices, rose sharply amid factors such as the war in the Middle East. Competitors are also reported to have raised repair material costs ahead of Samsung Electronics.
The Device eXperience (DX) division, which combines Samsung Electronics’ MX and DA divisions, saw its second-quarter operating profit this year fall sharply to around 1 trillion won due to such profitability declines. That figure is less than one-third of the 3.3 trillion won recorded in the same period last year.
For smartphones, price increases are unavoidable due to cost burdens. According to market research firm Omdia, the share of memory costs in the total cost of premium smartphones priced at $800 or more more than doubled, from 11 percent in the third quarter of last year to 26 percent in the first quarter of this year. DRAM prices are forecast to rise by double digits in the second half of the year as well. As a result, the average selling price (ASP) of smartphones worldwide this year is expected to be 21 percent higher than last year.
Samsung Electronics’ new foldable phone, the Galaxy Z Fold8, set to be unveiled on the 22nd local time, is expected to exceed a starting price of $2,000 (about 3.01 million won) for its lowest-spec model. Apple is also predicted to potentially exceed 3 million won for its top-spec iPhone 18, which will launch in September.