Note 7 suppliers to be compensated

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