Samsung to compensate Galaxy Note 7 parts suppliers


An advertisement of Samsung Galaxy Note 7 is seen at a mobile phone shop in Hanoi, Vietnam October 12, 2016. REUTERS/Kham

SEOUL: Samsung Electronics Co Ltd said on Oct 18 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 US$5.5bil (RM23.12bil) in operating profit from the third quarter of 2016 to the first quarter of 2017. — Reuters

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