Samsung will abandon Samsung SDI and choose Chinese manufacturer ATL

Samsung's worldwide recall of its new Galaxy Note 7 battery explosion has made the tech giant's batteries the focus of attention. On September 6, foreign media reported that as part of the recall plan, Samsung is preparing to replace all Samsung SDI batteries in the recall Note 7. In the future, the new batch of Note7 will completely abandon SDI batteries and switch to ATL, a Chinese manufacturer.

Samsung Note 7 battery explosion will abandon Samsung SDI to Chinese manufacturer ATL

Note7 mass recall due to explosive hazards

Chris Chang, an analyst at Nomura Securities, estimates that Samsung SDI supplies about 765 per cent of Note's batteries, while the rest comes from ATL, a Chinese manufacturer. The company only supplies batteries for the Galaxy Note 7 sold in China, so the Bank of China version of the Note 7 is not included in the recall.

Samsung abandons SDI batteries

It plans to recall about 2.5 million Galaxy Note7 devices, which analysts expect will cost the company about 1 trillion won($904 million). Samsung declined to estimate the financial impact. If SDI completely misses future supplies, ATL or even LG will become a supplier of Note 7 batteries.

Previously, Samsung SDI had performed much worse than rivals LG and ATL because it could not meet Samsung's mobile phone demand. Now, Samsung Note7 is having trouble with its SDI battery, and it looks like it can't be replaced.

It is understood that Samsung has decided to increase ALT's order and temporarily stop using Samsung SDI batteries in Note 7. However, whatever Samsung is trying to do now doesn't help. The accident has already hit Samsung's brand image and Note7 sales.

In its official recall statement, SDI batteries were the main cause of the Note7 explosion, and the Samsung subsidiary began producing non-replaceable batteries in 2014 in an effort to increase self-sufficiency in parts. Keep the gross margins of their products.

Samsung Note 7 battery explosion will abandon Samsung SDI to Chinese manufacturer ATL

SDI's battery knocked out Samsung.

In the previous S6 and S7 series, Samsung did not use SDI batteries, and it was ironic that the Note7's first gun actually injured its own people. If the Note7 order is lost in the future, SDI's performance this year is bound to be quite ugly.

SDI is also an Apple supplier.

Samsung SDI is also listed in the 2016 Apple Supplier Directory. The recall comes as Apple is about to launch a new iPhone 7 later this week. SDI declined to say whether the company is still supplying batteries to Apple, which an Apple spokeswoman has not commented on.

Asked about the battery supplier, an Apple spokesman said Tuesday: "We don't use the same core as the recalled Samsung Galaxy Note 7. All our products are above the highest quality standards and will not be affected by this defect. "

Samsung SDI produces smart phone cores in Cheonan, South Korea, and Tianjin, China, but will then be assembled through a factory in Vietnam and the Chinese branch of Korea ITM Semiconductor. Since the production of rechargeable lithium batteries began in 2000, it has now become one of the largest lithium battery companies in the world market.

Samsung Note 7 battery explosion will abandon Samsung SDI to Chinese manufacturer ATL

Gao Dongzhen, head of Samsung's mobile phone business, said on Friday that the battery explosion at Galaxy Note7 was caused by a defect in the core and had nothing to do with the phone itself. Like many handset makers, Samsung uses lithium-ion batteries in its smart phones to ensure lighter weight and longer battery life. Lithium batteries are now widely used in many fields such as laptops and airplanes. These products are powered by telecommunications.

Gao Dongzhen said that the core defect in Galaxy Note 7 caused the positive and negative electrodes to be unusually close. "This is a small flaw in the battery production process. "The quality control standards for the production process may not be high enough," he said. "

Samsung loses valuable window time

Analysts say the Galaxy Note 7 may have been affected by the fast-moving trend in the smart phone industry. The rapid growth of Chinese Oppo has been partly due to the promotion of fast charging technology. The company's famous advertising phrase "charging for 5 minutes and talking for 2 hours" has now become a household name in China.

Other big brands, including Samsung, are also developing fast-charging smart phones, but analysts say the technology is more likely to cause battery problems because of its high voltage.

The recall could have an impact on Samsung's operating profits in the second half of the year, which is often the best time for tech companies to sell, including the homecoming and Christmas shopping seasons.

The impact on Samsung's operating profits in the third and fourth quarters is expected to reach 1 trillion won, according to C.W. Chung, an analyst at Nomura securities. He estimated that the recall itself would cost about 400 billion won.

Peter Yu, an analyst at BNP Paribas, pointed out that Samsung had lost a valuable window of time before the launch of the new iPhone.

But in the end it won't have much impact on Samsung. The company may sell millions of phones less, but the global recall does not affect Samsung's brand image. In the long run, brand image is the most important. "

The page contains the contents of the machine translation.