Seoul - It was the battery, after all.
In a presentation and news conference on Monday that
lasted more than two hours, Samsung Electronics detailed the results of its
investigation into Note 7 smartphones that overheated and burst into flames
last year. There were few surprises. While the company cited flaws in battery
manufacturing and design for the fiasco, it took full legal responsibility and
vowed never to let it happen again.
The crisis was a public relations fiasco for South
Korea’s biggest company. Reports of people injured by exploding Note 7 phones
raced around the web, and nervous airlines banned the gadget -- and sometimes
all Samsung devices -- from their planes. The total cost of the recall was
estimated to be more than $6 billion.
Most consumers have moved on, and Samsung is now engulfed
in another crisis involving bribery, presidential influence-peddling and the
heir of the conglomerate. Monday’s presentation is its final push to assure the
public and investors that it acted responsibly, and put a lid on the episode.
“It was the battery - not the device itself, design of
the phone or software - so the lingering doubt over Samsung’s other smartphones
will be largely removed,” said Greg Roh, an analyst at HMC Investment
Securities.
The battery in the initial batch of Note 7 phones was
manufactured by an affiliate, Samsung SDI Co. Replacements made after a recall,
which came from Amperex Technology, a unit of TDK, were also faulty amid a
quick ramp-up in production. After stumbling a second time, Samsung decided to
end production and scrap the phone altogether.
Electrodes at a specific location within the first
batteries came in touch with each other, causing a short circuit that in turn
caused overheating and fires, D.J. Koh, head of Samsung’s mobile business, said
at the news conference. The defects happened both during the design and
manufacturing phase, he said.
Read also: Note 7: Samsung faces class-action suit
For the second batch of batteries, a defect in another
part of the unit triggered similar results. Samsung’s own investigation was
backed up by UL, Exponent and TÜV Rheinland Group, outside organisations
hired to determine the cause of the faulty units. In total about 200 000 phones
and 30 000 separate batteries were examined in an investigation that included
700 people.
“We provided the target for the battery specifications
for the innovative Note 7, and we are taking responsibility for our failure to
ultimately identify and verify the issues arising out of battery design and
manufacturing,” Koh said. “We have taken several corrective actions to make
sure this never happens again.”
With Samsung taking full legal responsibility for the
recall, it isn’t likely that Samsung SDI and TDK will bear the total cost of
the recall. Samsung SDI said in a statement that it has invested about 150
billion won ($129 million) in safety and that its batteries will probably be
used in Samsung Electronics’ next smartphone model. A representative for
Tokyo-based TDK didn’t immediately have a comment on the results of the
investigation.
Investors have also mostly moved on. Samsung shares,
which have been trading near record highs, were little changed on Monday
following the presentation. The company will report earnings on Tuesday, which
are projected to confirm a preliminary report showing that its business remains
sound.
Samsung says it’s now focused on learning from its
mistakes as it prepares to launch the next in its Galaxy S line. Koh said
Samsung isn’t planning to unveil the S8 at the Mobile World Congress in Barcelona
at the end of February, suggesting that the company is going to take its time
to make sure the product isn’t prone to any defect or problems.
“Consumers will not tolerate even the tiniest problems in
the S8, so that’s even the bigger challenge for Samsung now,” HMC’s Roh said.
“The first month of the release will be important. If no problems detected
during that one month, sales of the S8 could even surge.”
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