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Samsung to compensate Galaxy Note 7 parts suppliers

Samsung will compensate component suppliers for the discontinued Galaxy Note 7 smartphones.

By: Tech Desk | Published: October 18, 2016 9:18:02 am
 Samsung, Samsung Galaxy Note 7, Galaxy Note 7 fire, Galaxy Note 7 explosion, Galaxy Note fire India, Galaxy Note 7, Galaxy Note 7 production, Note 7 problems, Note 7 India, Note 7 compensation, Samsung Electronics Samsung will compensate suppliers for parts of the now-discontinued Galaxy Note 7.

Samsung Electronics Co Ltd said on Tuesday it will compensate component suppliers for the discontinued Galaxy Note 7 smartphones and consider giving them orders for other models to cushion the blow.  The world’s top smartphone maker said it would fully pay for unused Note 7 parts that have already been manufactured, compensate suppliers for unfinished components and pay for materials bought to make Note 7 parts.

“Samsung will determine the inventory levels for the partner companies and carry out compensation quickly,” the company said in a statement, without elaborating on how much it expected to pay. The decision comes after some South Korean government and central bank officials voiced concerns about the potential impact of the Note 7 crisis on the domestic economy. A deputy finance minister said the fallout could hurt the economy during the third and fourth quarters of the year.

Though most of Samsung’s smartphones are manufactured overseas, the company is a key customer for many South Korean parts makers including Samsung Electronics affiliate Samsung Electro-Mechanics Co Ltd.

Samsung last week permanently ended sales of the fire-prone Galaxy Note 7 smartphone less than two months after launch, a decision the company expects will cost $5.5 billion in operating profit from the third quarter of 2016 to the first quarter of 2017.

Read more: Samsung’s mobile division chief to investigate problems in Galaxy Note 7; vows to rebuild trust

In India, customers who had pre-booked the Galaxy Note 7 will get either a full refund for the smartphone or they can get the Samsung Galaxy S7, S7 edge instead. Samsung is also giving the Gear VR headset and a Oculus app coupon worth $50 free to customers who opt for the company’s phones.

The aftermath of the Note 7 fiasco has seen many airlines across the world ban passengers from the bringing the phone on board or even putting it inside their checked-in luggage. The Department of Telecommunications (DoT) has officially banned the Galaxy Note 7 in India, although the DGCA is yet to issue a formal ban on all Note 7 phones inside flights in the country.

The Directorate General of Civil Aviation (DGCA) officials had early this month said that the aviation regulator was in the process of issuing a fresh advisory on the use of Samsung Galaxy Note 7 phones inside aircraft.

With inputs from Reuters

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