The South Korean giant is pondering over a move to make a contract with LG Chem over supplying components for their smartphones in the future
Samsung Electronics Co. Ltd. (SSNLF) may soon ditch its own battery supply chain. The company might team up with LG Chem, which makes batteries for Samsungs close rival, LG Electronics. The change might be prompted by the Galaxy Note 7s exploding batteries.
Batteries for Galaxy Note 7 were supplied by Samsungs sister company, Samsung SDI, responsible for around 60% of the phone batteries. The rest were supplied by Amperex Technology Limited (ATL). However, when the devices were replaced after the recall, ATL was the primary supplier of batteries. Samsung reportedly plans to stay away from both suppliers for its next smartphones as they failed to resolve any of the problems in Note 7.
According to a high ranked official in Samsung, the company plans to diversify its suppliers, including those which provide batteries. It may even strike a deal with LG Chem, a company that supplies components, such as adhesives for touchscreens and battery cells. The official chose to remain unnamed.
The batteries are in line to replace the current range of Samsung batteries as soon as the companys latest smartphone. Amid reports that Samsung might launch the S8 earlier than expected, both companies are in a rush to complete any deals on the table. However, if the company does start taking batteries from LG Chem, it is likely that the new phone will not be released before May 2017. This is because battery testing process takes up to 6 months as the company would want to test compatibility with the device.
Samsung and LG have usually kept their distance in terms of components as both companies make high-quality components. LG Chem and the South Korean giant have also had an attempt at creating a partnership in the past, over the polarizer plate among other parts. However, the deal fell through and did not materialize.
Due to the battery problem, Samsung has suffered around $5.3 billion and also dented its reputation as being one of the best smartphone makers in the world. The companys situation has reached a level where people who work at the company are scared and uncertain about their future. The company is also on its way of failing to meet the goals it had set for 2016. Can Samsung come back from the Note 7 fiasco? Everyone wants an answer to this and we shall see that in the coming weeks.
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