The fallout of the Samsung Galaxy Note 7 fiasco is only starting to be revealed. Aside from Samsung's projected $1 billion loss, there are reports that indicate Samsung SDI is now struggling to keep its roster of clients intact.
Samsung SDI And The Galaxy Note 7 Crisis
Samsung SDI is a Samsung affiliate in the business of manufacturing batteries for hardware OEMs. It produced more than 70 percent of batteries used in the Note 7.
Samsung has refrained from issuing a blanket declaration that the Note 7 battery is to blame for the Note 7 explosions possibly in an effort to protect SDI, which manufactured the component.
Nevertheless, there is the implication of battery error, so SDI is now reportedly working to assuage jittery clients that its battery technology is safe. Apple has been cited as one of the clients sourcing SDI batteries for its products.
SDI Losses
According to Reuters, SDI is struggling on this task. Its report noted that since the Galaxy Note 7 incident, the company — a joint venture between Samsung and Japan's NEC — has already lost a fifth of its market value. Some clients must have been fleeing if the Q3 operating loss is any indication. It is more than double compared to the same period last year.
"Since the first recall, we've had many inquiries from our clients, including Apple, asking whether batteries used in their products are safe," a source within SDI told Reuters. "We are also asking ourselves whether we should have done it (the Note 7 battery) this way, or whether there could have been other ways."
Customer Apprehension
Based on surveys taken after the Note 7 recall, the Samsung brand appears to have weathered the storm. Consumers still view the name and its products favorably. The case, however, is different for SDI who must deal with a different set of customers.
Being associated with a faulty component even if there is really no flaw could affect the market performance of products made by SDI's clients. Even an automotive customer has expressed that the battery they are sourcing from SDI is totally different from the affected Note 7 batteries.
In the middle of the Note 7 incident, even Samsung decided to drop SDI batteries and outsourced its batteries from a different supplier, possibly from Amperex Technology, which has supplied the remaining battery packs for the Note 7 — those that were sold in China.
Samsung has halted production of the Galaxy Note 7 after the problem of exploding batteries persisted despite reports that indicate some claims were false.
It is not yet clear if Samsung will still use SDI battery for its future Galaxy Note 8 handset.
