Why was the Galaxy S26, released just three months ago, turned into a free phone?

Samsung's newest flagship smartphone, the Galaxy S26, is being offered as a 'free phone' by some retailers, a drastic price drop occurring less than three months after its official launch. This unprecedented move for a recently released premium device is raising eyebrows in the mobile industry.

The significant price reduction is largely driven by intensified subsidy competition among South Korea's three major mobile carriers. Following the repeal of the Terminal Distribution Improvement Act (TDIA) last year, which removed subsidy caps, carriers have been aggressively offering higher subsidies to attract customers. LG Uplus has raised its common support fund to 700,000 won, KT to 600,000 won, and SK Telecom to 580,000 won, a substantial increase from the initial 240,000 won offered at launch.

This aggressive subsidy war, combined with a slowdown in overall smartphone market demand, has led some retailers to offer the 256GB Galaxy S26 for free, or even with cash back, under certain conditions like subscribing to high-tier data plans. This is particularly notable as the Galaxy S26 was already launched with a higher retail price than its predecessor, the S23, due to rising component costs.

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Two major telecommunications companies waived penalties for number portability, leading to a significant increase in number transfers last July and January, respectively. This has already resulted in many people changing their phones, and current replacement demand has decreased.

Industry insiders suggest that the current market conditions, including the lingering effects of carriers offering penalty waivers for number portability, have reduced the pool of potential upgraders. This has prompted carriers and Samsung to engage in competitive subsidy increases, potentially to meet short-term sales targets and manage inventory for the premium device.

While carriers are increasing their contributions, some analysts believe Samsung may also be playing a role in subsidizing the phones to maintain sales momentum and manage stock, especially given the higher initial price point of the S26. The situation highlights the dynamic and often aggressive nature of the South Korean mobile market following regulatory changes.

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It is difficult to believe that telecommunication companies have raised the common support fund for premium products, which are usually popular, by increasing their own burden. It is possible that the manufacturer raised subsidies for sales and inventory management.