DJ Koh, President of Mobile Communications Business, Samsung Electronics

Typography

South Korea’s Samsung confirmed on Monday, January 23, that faulty batteries were the cause for random Samsung Galaxy Note 7 explosions last year. Samsung Electronics was forced to recall the flagship device around the world and discontinued making them. The model was originally intended to compete against Apple’s iPhone. The faulty batteries cost Samsung billions in profit and reputational damage.

To make things worse, Samsung also became embroiled in the corruption scandal that has resulted in President Geun-Hye’s impeachment. With revenue equivalent to about a fifth of South Korea’s GDP, Samsung group is the country’s largest conglomerate. Samsung Electronics is the most prominent unit of the group.

In a statement regarding the faulty Galaxy Note 7 smartphones, Samsung said internal and independent investigations “concluded that batteries were found to be the cause of the Note 7 incidents.” Speaking to reporters, Koh Don-Jin, head of Samsung’s mobile business, said: “We sincerely apologize for the discomfort and concern we have caused to our customers.”

In September last year, Samsung had to recall 2.5 million Galaxy Note 7 devices after several reports of the devices exploding or catching fire were shared on the internet. Samsung has placed the blame on batteries used from a supplier, which is widely believed to be Samsung’s partner firm SDI.

After the first reports of faulty Galaxy Note 7’s, Samsung released replacement devices with batteries from a different firm, thought to be Chinese manufacturer ATL – but those devices also started to combust, so Samsung eventually decided to kill off the Note 7 for good.

Aviation authorities around the world issued warnings about the Note 7, with airlines such as Emirates banning them from all flights. In the United States, as many as 1.9 million Galaxy Note 7’s were sold that had to be recalled.

To heal its reputation in the country, Samsung issued apologies to the public by featuring full-page advertisements in prominent US newspapers such as the Wall Street Journal, New York Times and Washington Post, admitting that it had “fell short” on delivering its promises with the Galaxy Note 7.

Samsung’s next model, the Galaxy Note 8, was expected to be introduced at Mobile World Congress this year in Barcelona, but Samsung has decided not to go ahead with the plans, according to Koh, in order to ensure that it has no safety issues.

The smartphone maker said it deployed around 700 researchers and engineers on its investigation, testing more than 200,000 fully assembled devices and more than 30,000 batteries. Samsung’s findings have been verified by independent investigators UL and Exponent.

According to Kevin White, principal scientist at Exponent, ‘Battery A’ had a design issue that pushed down the right corner of the battery, while ‘Battery B’ had defective welds. Koh has dismissed the possibility of suing its battery manufacturing partners, saying, “Whatever parts we use, the overall responsibility falls to us for failing to verify its safety and quality. At this point, I don’t think it’s right to seek legal action.”

A reported 1,000 different parts from some 450 suppliers were sourced for each Galaxy Note 7. In a statement, Samsung acknowledged that it provided the specifications for the batteries, saying in a statement, “We have taken several corrective actions to ensure this never happens again. The lessons of the past several months are now deeply reflected in our processes and in our culture.”

The Galaxy Note 7 fiasco took a major toll on the reputation of Samsung. It has estimated the cost of the recall at $5.3 billion, according to South Korea's Yonhap news agency. Samsung Electronics shares were up 0.5 percent at 1.87 million won in Seoul on Monday morning (23 January) after the announcement.