LG Chem Could be in Talks with Samsung to Supply Smartphone Batteries

Samsung in talks with LG Chem for smartphone battery supply in 2017

The Note 7 fiasco definitely marred the whole second half of the year for Samsung. Problems with batteries overheating, spewing smoke, catching fire and even exploding put a major damper on the Note line, but the company became more aggressive in marketing its Galaxy S7 smartphones, even adding two new colors. There’s also word that the Galaxy S7 will jump straight to Android 7.1.1 Nougat even though they’ve been beta testing the Android 7.0 Nougat for a while now.

News now emerges of possible talks between the two South Korean electronics giants Samsung and LG Chem, for the latter to start supplying batteries for future Samsung smartphones and tablets.

Until now Samsung has been using its own battery brand, the Samsung SDI, which was seen on the original Note 7s. They had also contracted Amperex Technology Limited (ATL), a Chinese battery maker who also supplies batteries for Apple’s devices, for the battery packs on the replacement Note 7s. Now, it appears that they could be looking for a more long-term partner in LG Chem, which already supplies batteries for its own smart devices as well as Apple, for iPhones and iPads.

Neither company has confirmed the potential deal or even the fact that they are in talks, but the Reuters report cites a Chosun Ilbo newspaper article as the original source. The newspaper has attributed the news to an “industry official”, who reportedly told them that “here was more than a 90 percent chance of a deal being struck” and that Samsung Electronics would start procuring batteries from its South Korean peer around the second half of 2017.

Until such time as Samsung or LG Chem can confirm the matter, it cannot be considered official. Neither company has yet made an official statement on the alleged talks or the deal.

But the implications are vast, nonetheless. Since LG Chem already supplies it own smart device line as well as Apple Inc., it could come down to an issue of supply capacity. Depending on how well the iPhone 7 and iPhone 7 Plus sell over the course of the next several months, LG Chem will need to plan out their production for next year. If Samsung joins their client list, that may put an additional load on LG’s capacity.

One of LG Chem’s main lines of business is IT & New Application Batteries, under which the Prismatic and Polymer battery lines are classified. These are the batteries that it supplies to Apple as well as its sister unit, LG Electronics. And it’s these batteries that will come under the “supply versus demand” spotlight if Samsung joins Apple as a co-client of LG Chem.

LG Chem is also focusing heavily on electric vehicle batteries, and are already in the process of building a 1.3 billion zloty ($339.4 million) battery plant near Wroclaw, southwestern Poland. It will be ready by 2018, and plans are afoot manufacture 100,000 batteries annually starting in 2019.

LG Chem is already one of the largest battery manufacturers in the world, supplying to multiple industries. Since Samsung itself is the largest smartphone company in the world by global sales – though they recently lost their crown to Huawei as the most profitable Android smartphone maker – this deal could catapult LG Chem to the top of the smartphone power solutions segment and create a huge moat against the competition.

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