South Korea Officially Investigating Samsung Fiasco

Given the virtual avalanche of troubles Samsung has endured of late, the investigation by its home government was the last shoe to drop.

And drop it has — the South Korean government has officially launched its own investigation to find out what caused the Galaxy Note 7 smartphones to catch fire. The investigation is actually ruled by analysts to be critical for Samsung at this point, as the firm is already taking a $5.3 billion hit to its operating profit over the next two quarters.

“Clearly, the top priority is for Samsung to assess precisely what caused the problems with the Note 7,” said Ian Fogg, head of mobile analysis at IHS Technology. “It’s clear from the ongoing defects with replacement devices that Samsung did not understand the true cause when it issued Note 7 replacement devices as part of the initial recall.”

Initially, Samsung had identified the lithium-ion batteries from one of its suppliers (Samsung SDI) — but when Note devices continued to catch fire after that replacement, it became clear the problem was bigger. Samsung has pulled the plug on the Note for now – ending production and sale just two months after release.

Samsung has also expanded the Note 7 recall to China — which was not in the original 10 markets included in the recall because their batteries came from a different supplier (Hong Kong-based Amperex Technology). But as Chinese devices also kept catching fire or exploding, both Samsung and Amperex — the world’s leading lithium ion battery maker — noted the batteries themselves aren’t the issue.

“Understanding what caused the problem is critical both to rebuilding trust in Samsung as a technology innovator but also to ensuring future Samsung devices do not have the same issue as the Note 7,” said Fogg.

There is also wide consensus that Samsung needs to be transparent with what it learns as a result of the investigation.

Tracy Tsai, a research vice president at Gartner, said Samsung should “share with the public what went wrong, how they will fix it and what they will do to prevent that from happening again in the future.” Tsai added that Samsung should also “treat this not only a single case but as a lesson: what they’ve learned from it, how to avoid it, and if just in case any similar crisis happens again, how they can handle it better.”