23/01/2017 World Business Report

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

soon.