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Unsurprisingly, Samsung’s battery-making arm is suffering

Samsung SDI, the Samsung group affiliate that made batteries for the Galaxy Note 7, is having a hard time in the market.

Published onNovember 24, 2016

Samsung Galaxy Note7 Teardown - iFixit
Replacing a battery requires a bit more work than it once did.

Samsung SDI, the Samsung group affiliate that made batteries for the Galaxy Note 7, is having a hard time in the market.

Samsung SDI (SSDI) manufactures batteries and other electronic components for various industries. Its clients include Samsung Electronics and other sister companies, but two thirds of its revenue actually comes from non-affiliate companies including Apple.

SSDI took the brunt of the Note 7 crisis. The company was initially blamed for the slew of fire incidents that eventually forced Samsung Electronics to recall the device. Fire incidents continued even after Samsung switched to Amperex batteries, but the damage to SSDI’s reputation was already done.

What caused the great Galaxy Note 7 defect? Here are the leading theories (UPDATE: Samsung explanation coming)

Company insiders told Reuters that several existing customers have expressed concerns about the reliability of Samsung SDI batteries. Among them, Apple, one of the biggest battery buyers in the world.

“Since the first recall, we’ve had many inquiries from our clients, including Apple, asking whether batteries used in their products are safe,” said a source at SSDI.

While Samsung SDI might be able to convince existing customers to stay, acquiring new clients may be more difficult, claim analysts cited by Reuters.

Samsung SDI’s market value decreased by around 20 percent since the Note 7 fiasco began and its Q3 operating loss doubled year-on-year.

What is the best Galaxy Note 7 alternative? [Poll of the Week]

Unsurprisingly, the highly embarrassing affair caused some soul searching within the company: “It’s a matter of our capability … We thought we had control (over all aspects of manufacturing), but it turned out there were some aspects we weren’t able to govern,” said one Samsung SDI employee.

Samsung Electronics has yet to reveal the precise cause of the Note 7 fire incidents. The Reuters report suggests that the phone was simply too ambitious. “We focused on boosting battery capacity, but this could have been disadvantageous to reliability,” said one engineer.

Meanwhile, the extent of the damage to Samsung Electronics’ image has been limited. According to a recent poll, most customers still trust Samsung devices.

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