14 DAY TRIAL // Last week, Samsung announced the discontinuation of its latest flagship, the Galaxy Note 7, and the company is now looking to retrieve all sold units. The situation doesn’t affect just Samsung, as components suppliers have also taken a hit.
Yonhap News reported that Samsung Electronics will pay full compensation to suppliers of Galaxy Note 7 components. Apparently, about 70 suppliers will receive compensation and Samsung Electronics is even considering placing orders for other smartphones.
The South Korean device maker didn’t mention how much it would spend on compensation, but analysts say that it could reach as much as $265.1 million. Samsung already apologized to suppliers for the situation.
In addition, the South Korean government has expressed concerns over the impact that the Galaxy Note 7 situation could have on the country’s economy, since some of these companies are based in Korea.
Samsung could up prices for smartphone components that it manufactures
The Galaxy Note 7 was discontinued following multiple reports of replacement units overheating and catching fire. The smartphone is already banned on airplanes and Samsung has set up a counter for replacing Galaxy Note 7 smartphones at Seoul’s Incheon International Airport.
A report by Business Korea reveals that the halt in production for the Galaxy Note 7 could impact the market when it comes to prices for components. Samsung Electronics accounts for 61% of the mobile DRAM sector and 36% of the NAND flash sector in the semiconductor market.
Samsung Display, an affiliate of Samsung Electronics, currently holds 95% of the AMOLED display market, and demand for such screens could increase as Samsung plans to up production of current premium smartphones, like Galaxy S7 and Galaxy S7 edge, as well as some mid-range series like the Galaxy A and Galaxy J lines, in order to recover losses generated by the Note 7 situation.
The company could increase prices for core parts of smartphones, including chips and AMOLED displays, and other manufacturers could up their smartphone shipments in order to attract Samsung fans to their products.