Note 7 suppliers to be com­pen­sated

The Sun (Malaysia) - - SUNBIZ -

SEOUL: Sam­sung Elec­tron­ics said yes­ter­day it would com­pen­sate suppliers hit by the de­ci­sion to scrap its Galaxy Note 7 smart­phones be­cause of safety fears with ex­plod­ing bat­ter­ies.

The South Korean elec­tron­ics gi­ant an­nounced a week ago that it was dis­con­tin­u­ing the Note 7 af­ter a chaotic re­call that saw re­place­ment phones also catch­ing fire.

Sam­sung said the af­fair would cost the com­pany an es­ti­mated US$5.3 bil­lion (RM22.2 bil­lion ) in lost prof­its over the three quar­ters be­gin­ning July.

The cri­sis also hit its numer­ous suppliers – who pro­duce ev­ery­thing from camera mod­ules to cas­ings – with their losses es­ti­mated at up to US$1.7 bil­lion.

“We will of­fer full com­pen­sa­tion for re­main­ing in­ven­to­ries of Note 7 com­po­nents among our suppliers.

“We feel sorry for caus­ing con­cern among our suppliers due to dis­con­tin­u­a­tion of the Galaxy Note 7,” it said in a statement.

The statement pro­vided no spe­cific fig­ures, but said the pay­out would be cal­cu­lated ac­cord­ing to the dif­fer­ent suppliers’ in­ven­tory vol­umes.

Given the Sam­sung Group’s stature within Asia’s fourth-largest econ­omy – it ac­counts for around 17% of GDP – the Note 7 de­ba­cle has had a na­tional im­pact.

The cen­tral Bank of Korea said it had taken the cri­sis into con­sid­er­a­tion when it trimmed South Korea’s 2017 growth out­look to 2.8% last week from its pre­vi­ous 2.9% fore­cast. – AFP

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