Samsung’s Note 7 Crisis Getting Deeper: Samsung To Compensate Suppliers

Samsung Electronics Co Ltd announced on Tuesday that it will compensate suppliers for losses resulting from the  discontinuation of Galaxy Note 7. Samsung seems to be in deep crisis following the fire troubles of Note 7.

Samsung said it would compensate all the suppliers affected by the decision of discontinuation of Note 7. Samsung had announced last week that it will discontinue Note 7 after replacement phones were reported catching fire.

Samsung's Note 7 crisis will cost the company about $5.3 billion in lost profits over the three-quarters beginning July. The crisis also hit several suppliers that manufacture components such ranging from camera modules to casings. As reported by business-standard.

Losses of suppliers are estimated to be around $1.7 billion. Samsung will pay for unused parts, manufactures parts, and unfinished parts. Samsung said in a statement,

"Samsung will determine the inventory levels for the partner companies and carry out compensation quickly."

Statement by Samsung has not given out any specific number, but the inventory of supplier would be considered by the company to determine the compensation. Samsung further added,

"We feel sorry for causing concern among our suppliers due to discontinuation of the Galaxy Note 7.we will complete the compensation quickly to minimize difficulty faced by them."

The Samsung Note 7 crisis had hit the South Korean economy badly. Samsung accounts for 17 percent GDP. The South Korean government and central bank officials had earlier raised concerns about the effect of Note 7 crisis on the country's economy. As reported by Japan today An official said it will impact the economy during the third and fourth quarters of the year.

Samsung has deep ties with Samsung Electro-Mechanics Co Ltd and other parts manufacturing companies. It is worth noting that Samsung phones are not manufactured in South Korea.

The discontinuation of Samsung Galaxy Note 7 has already hit the brand image of Samsung. With the compensation and losses that Samsung has faced the crisis only seems to deepen for Samsung.