After faulty batteries led to a global recall of its Galaxy Note 7 smartphones , Samsung Electronics will only use batteries made by China’s ATL for its replacement devices, a South Korean media report says. After the recall announcement earlier this month, the South Korean company is said to have contacted ATL to order an additional four million batteries as replacements in the Galaxy Note 7 devices.
Samsung had already announced that it would ditch Samsung SDI batteries for new orders even though the battery supplier denied any fault with its components. But Samsung remains firm that explosions were reported only in batteries produced by the sister firm.
Notedly, ATL also supplies batteries for Apple’s iPhone series, which means Samsung could face supply restraint if demand soars for the latest iPhone 7 and iPhone 7 Plus.
The Chinese company is set to become the sole battery supplier for Samsung by shipments for the time being since the company stopped receiving batteries from its main provider and has not found a third supplier. Analysts estimate Samsung had relied on SDI, its own subsidiary, for nearly 70 per cent of the Note 7 batteries, before cases of the phone catching fire during or after charging emerged, and 30% of it came from ATL.
The news drove down Samsung SDI shares nearly 6 per cent on Monday, worse than the 2.3 per cent fall in the broader market, although Samsung said it would maintain multiple suppliers. Samsung will start replacing the Note 7 phones with new batteries from September 19.
On Saturday, Samsung issued a statement in South Korea recommending customers to stop using the Galaxy Note 7 until they receive a new one. The Transport Ministry also revised its previous “ok” to use the phone on planes.
On Friday, the US Consumer Product Safety Commission instructed consumers to immediately power down the device and stop using it, amid more reports of the phones catching fire. There were reports that Samsung will remotely disable the faulty Note 7 units but Samsung has refuted the claims.
Apple’s new iPhone 7, touted to be the Galaxy Note 7’s closest competitor, was released in two variants, the iPhone 7 and 7 Plus, on 7 September at a crucial time when Samsung, its closest competitor, has been hit by the massive recall crisis thus giving Apple the advantage to steer consumers towards its phones.