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LG Chem Batteries for its New Phones Being Considered by Samsung

LG Chem Batteries for its New Phones Being Considered by Samsung
Following a safety scandal that led to the withdrawal of Samsung's Galaxy Note 7 phones, Samsung Electronics is taking no chances.
While reports suggested earlier that it had replaced its former battery suppliers, latest media reports, quoting sources familiar with the matter, said that Samsung is in talks with LG Chem on using its batteries for its new smartphones.
The sources said that the latest move by Samsung is a part of the South Korean company’s strategy to lower future risks arising out of faulty batteries in its products by the process of diversifying its battery suppliers.
There are also reports that there is possibility of supplying LG's batteries to rival Samsung's new smartphones that would start next year by two South Korean companies which are discussing the possibilities and ways to do so. Samsung SDI has provided 70% of the batteries used by its parent company and the latest move by the world’s largest smartphone manufacturing company suggests that Samsung Electronics will move to cut its reliance on Samsung SDI. Apart from Samsung SDI the rest of the batteries were provided by the Chinese battery maker ATL.
"Samsung wants to lower its risks by adding a new supplier," noted an industry source, who asked not to be named. The scandal over the Galaxy Note 7 "triggered it to expand outsourcing."
Its Galaxy Note 7 model, which was withdrawn by the company last week after U.S. telecom companies stopped sales of the device over safety concerns and the change comes as Samsung tries to identify the causes of a series of fires and explosions in its Galaxy Note 7 model. With help from experts in and outside the company, Samsung is investigating the problems.
Claiming that it could help make Samsung's smartphone production more stable, analysts welcomed the move.
"With LG Chem, Samsung will be more stable in its smartphone production, having three battery suppliers," said S.K. Kim, an analyst at Daiwa Capital Markets.
Samsung was interested in acquiring advanced battery technology from LG, said Son Young-joo, an analyst at Kyobo Securities. "Batteries are becoming more important in the smartphone market as manufacturers want longer battery life in a smaller size. As LG Chem is leading in the technology, Samsung may want to get some information from it," he said.
Samsung had moved to break its own rule of not using parts from its rival LG and that was remarkable, Son said. As they are competing for the top spot in the electronics sector in South Korea, the two companies have been reluctant to cooperate.
On n the news that Galaxy Note 7 owners had moved to file a compensation lawsuit against the company, shares of Samsung Electronics slipped 0.3% to 1.62 million won on Thursday. On the other hand, on the news that it was in talks to supply Samsung, LG Chem shares rose 2.7% to 251,000 won.

Christopher J. Mitchell

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