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Galaxy Note 7 recall to affect Samsung SDI, Samsung Electro-Mechanics: report

[THE INVESTOR] Market analysts forecast that Samsung Electronics’ anticipated recall of its latest flagship Galaxy Note 7 will undermine the profits of Samsung Group’s electronic component arms, including Samsung SDI and Samsung Electro-Mechanics, in the latter half this year.

“If the recall issue of the Galaxy Note 7 is solved in a short term, the impact on the concerned component suppliers will be limited. If it continues for more than two weeks, the drop in demand for components for the Note 7 will be inevitable,” said Song Eun-jeong, an analyst from Hi Investment & Securities. 

The analyst expects that the delayed release of low- and mid-range smartphone will further affect the component suppliers.

Others also anticipated the recent battery issue of the Note 7 will have a negative impact on share prices of the Samsung affiliates.

Samsung SDI and Samsung Electro-Mechanics saw their shares drop 6.06 percent and 2.26 percent, respectively, on Sept.1.

Samsung SDI is a major supplier of the battery for Samsung smartphones and the smartphone battery business accounts for more than 40 percent of its revenue. Samsung Electro-Mechanics supplies camera modules and capacitors to Samsung Electronics.

By Kim Young-won (