Wed, Oct 19, 2016 - Page 11 News List

Samsung to compensate suppliers

AFP, SEOUL

Samsung Electronics yesterday said it would compensate suppliers hit by the decision to scrap its Galaxy Note 7 smartphones because of 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 in lost profits over the three quarters beginning July.

The crisis also hit its numerous suppliers — which 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,” the firm said in a statement.

“We feel sorry for causing concern among our suppliers due to discontinuation of the Galaxy Note 7... We will complete the compensation quickly to minimize difficulty faced by them,” it said.

The statement gave 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 about 17 percent of GDP — the Note 7 debacle has had a national impact.

The Bank of Korea said it had taken the crisis into consideration when it trimmed South Korea’s growth outlook for next year to 2.8 percent last week.

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