23/01/2017 World Business Report


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Nothing wrong with the phones, it was all in the battery - Samsung


explains the reason why the Galaxy Note mobile phones caught fire and


were recalled. The UK government to outline the industrial strategy.


But with Brexit looming large, where will any government money go?


Also in the programme: iPhone maker Foxconn signals $7 billion


Korean electronics giant Samsung has released the results


of its investigation into its flagship Galaxy Note 7 smartphones.


In October last year the phones were recalled because some had


The company today confirmed problems with the design saying


the manufacturing of batteries was to blame, not the actual phones.


The Note 7 was supposed to rival Apple's iPhone 7 but instead,


the device caused massive damage to the company's profits,


Last year, over 100 of the phones spontaneously burst into flames.


This forced Samsung to halt production and recall millions


globally months before the all important Christmas sales period.


The debacle almost entirely wiped out the company's mobile business


profit in the third quarter of last year,


And this dragged total profits at the company down by 30%,


Samsung itself predicted another three billion dollars could be wiped


off profits over the next two quarters.


The total cost of the recall has been estimated at around


$5.3 billion, but the damage to the company's


This is how one of the independent external experts that has helped


Samsung find the cause of the fires summed it up.


We need additional analysis to understand the root cause of the


damage to the edge or corner of the battery which results in internal


issues at that location. In summary design and manufacturing issues with


the batteries led to failures of the devices.


With me is Daniel Gleeson, Consumer Technology Analyst at Ovum.


Good morning. Good to see you. So that was the big press conference


that happened today. Give us more on where they went wrong. While it is


good news for Samsung that it wasn't their own design that was the


problem it was a problem on their behalf that they didn't do enough


testing of the Note 7 and after they caught the problem and switched


battery suppliers they asked the new supplier to go too fast too quickly


and a whole new set of problems occurred with this new supplier. So


there are a lot of lessons to be learned for other manufacturers as


well as we try to shrink phones and pressure the batteries about how to


design and test those issues. It was almost like the race was on to get


this phone out there at the same time as the apple iPhone 7 and also


Google launching its phone as well, there is so much competition right


now that perhaps there I was off some of the detail. Exactly, and


especially the last two or three months of the year are so important


for any consumer device sales obviously with black Monday in the


US leading into Christmas and most of the western world leading into


the Chinese New Year at this time of year. So, what now, they have set as


well today that they are not going to be launching their next news


Samsung smartphone in February at the big mobile phone conference in


Spain, which was expected. So, what now? Yes, the Galaxy S8, which we


expected at the end of February we won't see until April, which gives a


big window of opportunity for Sony, HTC, Huawei, launching flagship


phones in the next month or two to make an impact on the market. For


Samsung it was them in a difficult position because they are in a


non-traditional launch window but I guarantee they will come to the


market with the S8 and not only will it be very well-prepared and tested


but they will come with millions of marketing to try to overcome the


brand damage. How damaging has it been, how put off are we when it


comes to buying a Samsung, are we keeping Samsung for the time being,


our people staying loyal? I think with most controversies with mobile


phones, it stuck in people's mind, it was a protracted recalled, that


really pushed it into the public consciousness, the butt of


late-night jokes on American TV networks, it was all over social


media, so I think because of that it is a kind of issue that will stick


with consumers for several months and will impact on a lot of


decision-making. Ultimately I think Samsung can recover if they invest


heavily enough into their market. And if nothing goes wrong again in


future, you would imagine. Thank you for your time this morning. And


there is much more detail on the story on the website, as with this


story too, which we will discuss next.


Foxconn, one Apple's biggest suppliers based in Taiwan,


has confirmed it's considering setting up a display-making plant


Sharanjit Leyl is in our Asia Business hub in Singapore.


Interesting announcement from Foxconn? Indeed it is, and it was


from none other than the chief executive Terry Go, part of Taiwan's


technology giant Foxconn, basically confirming they are to set up a


plant in the US, with Mr Go saying it might exceed $7 billion. It is a


major supplier of apple and a likely generate thousands of jobs for the


US, if it does indeed go ahead and the plans come after US President


Donald Trump confirmed his America first agenda which is meant to


overturn international trade treaties, which he said during his


inaugural speech on Friday and during his campaign. Since his


election he repeatedly threatened high import tariffs in order to try


to encourage US as well as foreign companies to improve production in


the United States and he singled out China as a significant cause of loss


of manufacturing jobs in the United States. As we know, Foxconn doesn't


just manufacture for Apple but for other global giants as well. It is


formally known as Honhai Position and has most of its factories in


China, where it assembles its iPhone. Very interesting. Thank you.


See you soon. The UK Prime Minister Theresa May


will today launch the government's vision for an industrial


strategy for Britain. Our Industry correspondent


John Moylan talks us through what the government


is likely to announce. How can the government ensure the


economy is fit for the future? For the Business Secretary Greg Clark


places like this are part of the answer, it is a new automotive


innovation centre in Warwick backed by government industry money and


designed to keep carmakers firing on all cylinders. One of the things


with industrial strategy is to build on the great success and also to


help make sure that we drive growth in all parts of the country. The


industrial strategy will be committed to driving very hard to


spread the opportunities right across the country and to drive not


just jobs but really good well-paid jobs in all parts of the country. It


is going to be a big part of the strategy. Today the strategy will be


outlined in a new green paper aimed at kickstarting wide-ranging


consultation on the government's new vision, including plans for sector


deals where businesses and stakeholders in specific sectors can


make the case for government support. That is just one of ten


so-called strategic pillars which are all designed to increase


productivity and drive growth. In the past, governments used


industrial strategies as an excuse to back key firms or industries. It


didn't always work. As we prepare for the challenges of leaving the EU


the big test of this plan will be that it doesn't just deliver for


successful firms like this but that it reaches out to all parts of the


UK to deliver the government's aim of an economy that works for


everyone. United Airlines says in a statement


it grounded all domestic flights You might have noticed if you try to


fly on Sunday. It did not give any more details,


and it was not immediately clear how The Chicago-based Airline


and United Express operate more than 4,500 flights a day to 339


airports across five continents. So, let's hope they have fixed that


problem. Looking at market very quickly and we have a stronger yen,


the dollar falling in value, affecting Japan, and that is merely


because the news out of the new president so far hasn't really been


about how to boost growth but more political issues and issues that


could cause a must as opposed to host growth and help the world's


biggest economy, so disappointment for financial markets so far on the


Trump effect for the global economy - that is down for the dollar and up


for the yen, which is not helping exporters in Japan. I will see you




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