source from:ft
Samsung says battery defects caused Galaxy Note 7 fires
Company looking to move past design and manufacturing flaws as S8 debut looms

5 MINUTES AGO by: Bryan Harris in Seoul
Samsung Electronics has laid the blame for its exploding Galaxy Note 7 handsets on the devices’ batteries, pointing the finger at overheating caused by design and manufacturing defects.

Monday’s findings follow a three-month investigation by the South Korean company and independent third parties into an embarrassing debacle that is expected to cost the world’s largest smartphone maker more than 5bn dollars.

Released to positive reviews last August, the Note 7 was recalled and abruptly killed off within two months after several caught fire. The incidents prompted US regulators and airlines globally to ban the smartphone on flights in a highly publicised move that struck at the heart of the company’s reputation.

Bowing deeply before a packed auditorium in Seoul, Koh Dong-jin, president of Samsung’s mobile communications business, apologised on Monday for the fiasco.

Ruling out any issue with the fire-prone smartphones’ software or other hardware, the company said in a statement: “Our investigation, as well as investigations completed by three independent industry organisations, concluded that the batteries were found to be the cause of the Note 7 incidents”.

We have taken several corrective actions to make sure this never happens again
Samsung said the investigation involved 700 researchers conducting tests on 200,000 assembled phones and 30,000 additional batteries to determine the cause of the fires — which it referred to simply as “incidents”.

The probe found that the batteries were poorly designed and manufactured, and thus did not fit properly in the devices. That caused them to short-circuit and resulted in devices overheating and catching fire.

“We provided the target for the battery specifications for the innovative Note 7, and we are taking responsibility for our failure to ultimately identify and verify the issues arising out of battery design and manufacturing,” the company said.

“We have taken several corrective actions to make sure this never happens again,” it added.

Samsung, which is now looking ahead to the crucial release of its flagship Galaxy S8 handset in the coming months, was at pains to demonstrate that its findings were supported by independent third parties.

Two US companies, UL and Exponent, concurred that abnormalities in batteries from two suppliers were at the crux of the issue. Neither supplier was named, but it is known that affiliate Samsung SDI and Amperex Technology, a subsidiary of Japan’s TDK, provided batteries for the Note 7.

Far from securing the South Korean group’s place in the market, the exploding Galaxy Note 7 threatens it
The report was highly technical in nature and largely skirted concerns among analysts and governance activists over the role played by Samsung’s corporate culture, including the chasm between demands from executives and engineers’ capabilities.

Kim Yong-serk, a former Samsung mobile engineer, said the company’s “overambitious” attitude towards battery capacity and charging speeds caused the incident and would need to be addressed in the S8 device.

“However, with their reputation on the line, Samsung clearly investigated the cause of the fires in a very conservative and cautious way, so I view its investigation as credible,” Mr Kim added.

Despite the debacle, Samsung this month forecast its best quarterly operating profit in more than three years, projecting a 50 per cent surge for the last three months of 2016 thanks to strong sales of chips and display panels. The company is due to publish detailed results on Tuesday.

Separately, Mr Koh said on Monday that the Galaxy S8 would not be released at the Mobile World Congress in Barcelona next month — an event typically used by the company to reveal its latest flagship smartphone — suggesting the release of the highly anticipated device could be delayed.

Shares in Samsung were up 0.8 per cent on Monday afternoon in Seoul.

Additional reporting by Kang Buseong