Samsung battery explosion incident: industry crisis and turning point

Samsung Electronics of South Korea is a comprehensive enterprise mainly engaged in smartphones, DRAM, TVs, AMOLED and wafer foundry. According to the survey report released by market research firm Gartner on August 20, Samsung's mobile phone sales in the second quarter of 2016 increased from 72.07 million units in the same period of 2015 to 76.74 million units, and its market share reached 22.3%, ranking first, mainly benefiting from the hot sales of Galaxy series mobile phones. However, after the Galaxy Note 7 battery explosion incidents occurred in various parts of the world in early September, this product, which was originally Samsung's main product to fight against its competitor Apple iPhone 7, brought Samsung an unprecedented disaster.

Although Samsung Electronics seems to have announced with sincerity that consumers can exchange the same new phone or other models, the lingering shadow of the explosion still lingers in the minds of consumers, so the backlash of demanding refunds has also begun to be heard. However, due to different situations in different countries, the replacement plan has not been unified globally so far, which has also led to inconsistent consumer welfare. Australia and South Korea can accept unconditional refunds. The U.S. Consumer Product Safety Commission (CPSC) also announced an official recall on September 15 and required Samsung to allow consumers to choose a refund. However, if Taiwanese consumers want a refund, they must go through a Samsung repair center to confirm the abnormality. Not only is the time later than other countries, but there are also various restrictions, which is really unfair to consumers. Samsung is in big trouble due to problems with its own batteries Samsung has officially confirmed the cause of the explosion of the mobile phone. It was a lithium battery made by Samsung's subsidiary Samsung SDI (South Korea Samsung SDI). SDI mainly produces lithium-ion batteries, car batteries, LCD panel components and solar panels. Since the explosion, its stock price has fallen from 124,000 won, the highest point since this year, to 98,300 won. The decline has been about 16.3% in the past month. Compared with Samsung Electronics (South Korea Samsung Electronics), the stock price has fallen from 1.687 million won, the highest point since this year, to about 4.3% since the explosion. The decline is obviously heavier. Although there are news of mobile phone explosions every year, such frequent battery explosions like the Samsung Note 7 are unprecedented. But from a technical perspective, why did the explosion occur? First of all, we need to understand that lithium batteries have the risk of explosion. It is not a completely harmless product. However, because lithium is the most active chemical element in the world and has the best storage and discharge efficiency, it is widely used in the industry for charging and discharging energy. Then let's further examine the composition and working principle of lithium batteries. Lithium batteries mainly include four parts: electrodes (positive and negative), electrolyte, isolation membrane and battery shell. The working principle of its charge and discharge is that when the battery is charged, the positive electrode material (including lithium manganese oxide, lithium iron phosphate and nickel cobalt lithium) separates the lithium element inside through the electrolyte in the middle and reacts chemically with the negative electrode material (mainly carbon material). At this time, the more lithium ions that run out of the positive electrode and transfer to the negative electrode, the higher the energy stored in the battery; conversely, the more lithium ions that run out of the negative electrode and transfer to the positive electrode, the more energy the battery releases. In simple terms, the battery charge and discharge cycle is a repetitive movement of positive electrode → negative electrode → positive electrode, and the transfer of electricity is achieved through the chemical reaction between the positive and negative electrode materials. This is the basic operating principle of lithium batteries.

In terms of market development needs, in order to meet the requirements of consumer electronic products in recent years for improved performance and increased functions, there is an urgent need for long-term use of batteries. How to increase the capacity and extend the battery life of the product has become the primary key factor. At the same time, in order to meet the current trend of thin and light design of products, in the hope of reducing the battery volume and increasing the capacity, improving the battery energy density has become another important technical development trend. The main reason for the Samsung Note 7 battery explosion this time is that the manufacturer has to forcibly increase the battery energy density in order to meet the thin and light design of the mobile phone and improve the battery life of the mobile phone. In the absence of increasing the battery capacity and causing volume expansion, it is unwilling to increase the battery capacity and cause volume expansion, thereby increasing the battery's insecurity. Development Trends of International Battery Manufacturers The top four lithium battery manufacturers in the world are all Japanese and Korean manufacturers, namely Samsung SDI and LG Chem in South Korea, and Panasonic and Sony in Japan. In recent years, polymer lithium batteries, which have been widely welcomed by notebook/tablet and mobile phone manufacturers, have become a battleground for various battery manufacturers. As for Japanese manufacturers, Panasonic's close cooperation with Tesla, a major American electric car manufacturer, is well known. In addition to becoming Tesla's exclusive battery supplier with its excellent 18650 cylindrical battery, Panasonic is also not behind in the development of square lithium batteries and soft-pack batteries. At present, square lithium batteries used in consumer electronics have a volume energy density of 620Wh/L, and soft-pack batteries have a production capacity of 650Wh/L. The products of Sony, a long-established lithium battery manufacturer, have an average production capacity of 630Wh/L. However, on July 28 this year, Sony and Murata Manufacturing announced that they had signed a memorandum of understanding and planned to sell their battery business to Murata Manufacturing and complete the transfer of all businesses in March next year. Appendix: Samsung's explosion crisis, relying on this mysterious company to rescue The serial explosion of mobile phone batteries caused Samsung Electronics to launch the largest product recall plan in history, with an estimated loss of more than one billion US dollars. After the crisis, the company that provided qualified batteries to Samsung was a mysterious battery factory co-founded by two Taiwanese. This company is called New Energy Technology. Two of the four founders are from Taiwan On September 8, the Federal Aeronautics and Space Administration of the United States issued a warning that the battery of the Galaxy Note 7 produced by Samsung Electronics has the risk of explosion. "Please do not use the Note 7 mobile phone on the plane!" For a while, the Samsung Note 7 mobile phone became the most "famous" mobile phone in airports around the world. This new mobile phone has been reported to have spontaneously combusted in various parts of the world. The lithium battery produced by Samsung SDI itself is the culprit that caused the mobile phone explosion. According to reports from international media such as Reuters and the Financial Times, after the accident, New Energy Technology, a subsidiary of TDK, became the largest mobile phone battery supplier for Note 7 and the biggest beneficiary. Two of the four founders of this company are from Taiwan. Why did they take on the challenge? New Energy Technology was established in 1999. Two of the founders are Chen Tanghua and Zhang Yujie from Taiwan. "They are classmates from Jianzhong High School and National Taiwan University." said Pan Jinping, group leader of the Materials and Chemical Research Institute of the Industrial Technology Research Institute. Zhang Yujie graduated from the Department of Electrical Engineering of National Taiwan University, and Chen Tanghua graduated from the Department of Chemistry of National Taiwan University. Chen Tanghua was also a classmate of former Premier Liu Chao-hsien in the Department of Chemistry of National Taiwan University. Liu Zhaoxuan even wrote in his autobiography of his martial arts novel "The Sword of Kingly Way" that it was because Chen Tanghua started a business in Fujian that he visited Ningde, Fujian, and found the inspiration for the novel. The other two founders are Liang Shaokang and Zeng Yuqun from Hong Kong and China. Chen Tanghua is the first president of New Energy Technology. He worked at IBM for many years and his original expertise was in developing magnetic materials for disks. Pan Jinping recalled that when he first saw him, the president took a bus from Tsinghua University to ITRI with his luggage, without any pretense of a president. When he started his business, Chen Tanghua was 55 years old. He saw that the lithium battery industry would be a rare opportunity with the explosion of consumer products. The four founders raised 2.5 million US dollars to start a business. If you want to start a business, technology is the first threshold. When it first started, New Energy Technology spent a lot of money to buy patent licenses for lithium batteries from American laboratories. After they tried to make them according to the patent, they found that the batteries they made would expand and deform. This patent was useless! Chen Tanghua led the R&D team to think hard about how to solve the problem. Zeng Yuqun, who participated in the R&D at the time, once said that they guessed that the problem was in the composition of the electrolyte, because the upper temperature limit of lithium batteries is 85 degrees. In the laboratory formula, some ingredients have a boiling point close to 93 degrees, which is higher than the upper temperature limit of lithium batteries. This may be the key to battery deformation. They worked day and night to develop seven or eight different formulas, tested repeatedly for two weeks, and finally found by surprise that two of them could solve the expansion problem. Technology alone is not enough. "Batteries are an industry that compares scale and capital." A venture capitalist observed that at that time, lithium batteries were products that only large companies like Sony were able to produce. In terms of capital, new energy had no advantage. They almost couldn't survive at one time and wanted to sell the company to other Taiwanese manufacturers, but no one wanted to buy it. Battery customization Apple designated cooperation The way to survive developed by new energy is that Sony and other large manufacturers make standardized, fixed-shape lithium batteries, and they tailor-make batteries for customers that are not easy to automate. They started with consumer electronics such as DVDs and continued to train their troops on the wave of the growth of the Chinese market. In 2004, they entered Apple's iPod supply chain. "Apple was not big at that time." Pan Jinping said that from then on, whenever Apple developed new products, it would give priority to cooperating with New Energy Technology. In 2005, major shareholders such as Hanting intended to exit the company. They made a key decision to sell all the company's shares to Japan's TDK for US$100 million, and TDK still entrusted them to operate. Venture capitalists observed that Chen Tanghua's technology and customers, combined with TDK's funds, formed a perfect combination. Although New Energy Technology is a subsidiary of TDK, there are no Japanese in the management team. The technology is developed by them and the Japanese parent company provides funds. With Apple orders and TDK funds, the performance is booming. Pan Jinping observed that they are now China's "most profitable battery company." Chen Tanghua passed away due to illness in 2010. He had tried many times to introduce the explosion-proof battery technology of the Industrial Technology Research Institute, but failed. However, the battery technology accumulated over the years became the key to saving Samsung from the battery explosion crisis. Zhang Yujie is the chairman of New Energy Technology. Now, they have entered the electric vehicle battery market. In the future, this team will create another big growth! New Energy Technology Founded: 1999, merged into Japan's TDK Corporation in 2005 Main products: lithium battery manufacturing services Main customers: Apple, Samsung Report card: Revenue of approximately NT$45.5 billion and net profit of approximately NT$7.4 billion in 2015

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