- Samsung's networks revenue fell sharply year on year in Q1 2026
- In the midst of a tough telecom market, Samsung is pivoting to focus on AI and data center customers
- It's getting into the silicon photonics and co-packaged optics game
Samsung’s networks business took a beating in Q1 2026. Revenue of $407.5 million (600 billion KRW) was down substantially from roughly $543 million (800 billion KRW) in Q1 2025 and around $734 million (1.08 trillion KRW) in Q1 2023. But as its mobile networks business flails in the lull between 5G and 6G, the company is setting its sights on underpinning a different kind of network.
For the record, Samsung isn’t alone in facing a tough telecom market. Ericsson’s mobile network sales declined 8% in Q1, while Nokia’s fell 3%. Ericsson’s overall revenue also dropped 10%, but Nokia eeked out 2% growth thanks in large part to a big boost from its Optical Networks division and a jump in sales to AI and cloud customers.
Samsung, though late to the party, seems to have gotten the memo that optical is the way to go as AI drives demand among hyperscale customers.
In March, the company announced plans for its Foundry division to get into the silicon photonics and co-packaged optics game. During Q1 earnings, Foundry EVP Suk Chae Kang said it will be “starting mass production for a major optical communications module player starting in the second half of this year.”
“We are actively pursuing structural transformation by diversifying our application portfolio beyond mobile into AI HPC, automotive, and aerospace sectors,” Kang said. “For data centers, we are seeing growing demand for high-bandwidth and low-power data transmission, which has led to a rapid rise in demand for silicon photonics. We are developing not only silicon photonics components, but also technology for the CPO or co-packaged optics business.”
Samsung’s approach to the optical market differs from Nokia’s in that it will apparently manufacture photonics and CPO for others rather than selling its own optical products. But the goal is the same: capitalize on AI-driven demand from hyperscalers and big tech companies.
“Telecom sales is tough,” AvidThink Founder and Principal Roy Chua told Fierce. “Going into silicon photonics makes sense because optical is a growth market and that should help them.”
The company actually has another ace up its sleeve: Memory. We’ve noted before that memory is becoming a key constraint for AI and shortages in the market mean demand for high-bandwidth memory has skyrocketed. Samsung began shipping mass-produced HBM4 in Q1 and plans to supply samples of HBM4E in Q2.
“We expect HBM sales to increase substantially by more than threefold year on year in 2026,” Jaejune Kim, EVP of Samsung’s Memory Business, said on the call.
In a nutshell, Samsung is slowly putting the puzzle pieces together to transform itself into an AI powerhouse.
Samsung’s plans for its networks division are less clear. The business is one of its smallest revenue streams and barely got a mention on its earnings call.
Here’s our only hint: the company said in a press release it plans to “capitalize on leadership in vRAN, ORAN and AI-RAN to capture new markets” in the back half of this year.