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Samsung's shares fell to their lowest level in nearly two months
on Monday after it told customers to switch off and return their
new Galaxy Note 7 smartphones due to fire-prone batteries.
Samsung's own SDI subsidiary had been the dominant battery
supplier for the Note 7, supplying around 70 percent of the
batteries globally, according to analyst estimates. ATL had
supplied around a third, with a focus especially in China.
The source said that ATL had received additional orders for Note
7 batteries after the smartphone giant instigated the global
recall. The recall came just over two weeks after the company
launched its latest premium phone, which features an extra-large
screen and high-resolution camera. It followed reports of the
988,900 won ($885) phone igniting while charging.
The person added ATL was likely to take over battery supply for
the model at least for the time being. ATL's chief operating
office Joe Kit Chu Lam told Reuters by phone he could not
comment on a specific client due to business confidentiality
agreements. He added, however, that the firm had received a
"significant increase" in business this month.
"We expect the situation to last for the coming one to two
quarters. This will not bring any capacity issue," he said. ATL
is also a listed supplier for Samsung rival Apple, which
unveiled its rival new iPhone 7 last week. Samsung declined to
comment. Japanese electronics firm TDK Corp, the owner of ATL,
also declined to comment.
The official China Daily newspaper reported earlier on Tuesday
that ATL would increase shipments of batteries to Samsung. South
Korea's Yonhap news agency said on Sunday Samsung would now only
use batteries provided by ATL for the Galaxy Note 7.
Samsung first halted sales earlier this month of the Note 7 in
10 markets, including South Korea and the United States, but not
in China where it said the model was equipped with batteries
from a different supplier. Analysts said the supplier shift
would likely mean ATL would be temporarily the sole supplier for
the Note 7, though this was likely only to be a short-term
solution.
"This could mean ATL would make all the batteries on Note 7s to
be sold this year – which I expect to be 12 million maximum
now," said SK Kim, a Seoul-based analyst with Daiwa Capital
Markets. "But I believe this is a temporary arrangement and will
not affect SDI's position as the dominant battery supplier for
Samsung."
(Writing by Adam Jourdan; Editing by Greg Mahlich)
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