July 27, 2024

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[THE INVESTOR] Samsung SDI's compensation plans for Samsung Electronics' discontinued Galaxy Note 7 have been put on hold as the two sister firms have yet to find a middle ground for settlement, industry sources said on March 21.

“The two firms are still in talks over the settlement money,” a source briefed on the matter told The Investor on condition of anonymity. 

The source said Samsung SDI has been asking for some reduction in the amount of compensation. The battery maker suffered an operating loss of 926.3 billion won (US$826.90 million) last year following the Note fallout, coupled with sluggish sales of automotive batteries especially in China.

In January, Samsung Electronics blamed faulty batteries for the fire-prone Note phone in its own probe results. Since then, the company has been holding compensation talks with battery suppliers -- Samsung SDI and China’s ATL -- even though it has not sought legal action.

“Samsung Electronics is likely to lower the settlement money considering their close ties. But we have to wait and see,” the source added.

A Samsung SDI spokesperson declined to further elaborate, saying the talks are still ongoing.

Sources say Samsung SDI has set aside more than 95 billion won to pay for the damage caused by its faulty batteries. The company supplied 70 percent of the Note batteries, while ATL accounted for the rest.

About 4 million units of the Note phone were sold globally before its sales ceased in a month after its release in August last year. The unprecedented recall cost Samsung Electronics more than 7 trillion won in operating loss.

Despite the Note fiasco, the world’s largest smartphone maker renewed its commitment to the partnership with the battery-making sister firm as it decided to use its batteries for the upcoming Galaxy S8 smartphone that debuts on March 29. It is widely rumored that ATL has been replaced with Japan’s Murata Manufacturing as a secondary battery supplier for the new Samsung phone.

By Kim Young-won (wone0102@heraldcorp.com)