Samsung’s Roh Tae-moon Grapples with Smartphone Profit Woes — Will In-House AI Survive?

[Korea Financial Times, Gwak Horyung] Can Samsung Electronics regain profitability in a smartphone market that has remained stagnant for eight years? Attention is now on whether the “premium strategy” championed by Roh Tae-moon, who heads Samsung’s mobile division, will still hold in the age of AI.


The global smartphone market has been in a prolonged slump for eight years. According to market research firm Counterpoint Research, global smartphone shipments peaked at 1.57 billion units in 2017 and dropped to 1.28 billion units by 2024. With smartphone penetration in major global markets nearing saturation and technology reaching maturity, replacement cycles continue to lengthen.
The performance of Samsung Electronics’ MX Division has also plateaued. Last year, sales stood at KRW 114 trillion, nearly unchanged from KRW 107 trillion in 2014—ten years ago.

Operating profit margins (including the Network Business Division) reached 18% during the global success of the Galaxy S2, S3, and S4 from 2011 to 2013, but dropped to 9% last year. It is the first time in five years that the margin has fallen to single digits, since the large-scale restructuring (personnel realignment) in 2019, when it was 8.6%.


Roh Tae-moon, who has led the MX Division since 2020, has emphasized “the best of the best, the ultimate premium.” The strategy is to boost profitability by focusing on the premium segment, rather than competing in the mid- to low-end market where Chinese rivals are strong.

On the hardware front, Samsung attempted to expand form factors with foldable phones, launching the Galaxy Fold (unfolds horizontally) in 2019 and the Galaxy Flip (folds vertically) in 2020. However, these have not replaced conventional smartphones. When folded, the devices are thick and less portable, and durability issues have arisen. Samsung Electronics aims for a turnaround with the launch of the Fold and Flip 7 on July 9, which are expected to be the thinnest foldable phones in the company’s history.

Software remains a key challenge. In particular, the level of collaboration with other companies on AI services is emerging as a critical issue. Building in-house AI can help reduce costs, but such a strategy risks limiting functionality compared to external innovations—potentially compromising the user experience.
Currently, Samsung Electronics is pursuing a fundamentally closed AI strategy. The company has equipped its smartphones with “Galaxy AI” starting with the Galaxy S24, based on its own large language model “Gauss,” enabling on-device processing via built-in chips.

In addition, Samsung has adopted a hybrid approach, allowing access only to external AI services that the company has specifically approved. This leaves the door open for potential collaboration with “AI giants.”

Even Apple Inc., which prefers a closed proprietary ecosystem from the operating system (OS) level, appears to be feeling the pressure. Recent foreign media reports indicate that Apple is considering integrating OpenAI’s GPT and Anthropic’s Claude models into Siri.

Previously, Apple announced at the Worldwide Developers Conference (WWDC 2025) last month that upgrades to Siri would be postponed until next year.
An industry official commented, “Apple’s delay in unveiling Siri AI appears to be due to the model’s performance not meeting standards. Samsung Electronics will also inevitably have to consider external partnerships.”

Gwak Horyung (horr@fntimes.com)