Last month I wrote about Samsung recalling about 2.5 million Galaxy Note 7 smartphones. At the time, I noted that the Samsung predicament was just the latest in a string of Li-ion battery detonations that had affected a wide-range of mobile products, including hoverboards, portable computers and even large-passenger aircraft. However, the Samsung situation has now become a fiasco, at considerable cost to the company. But before I elaborate on the cost, let’s look at what is known about the cause.

Root Cause Still Unclear

To date, no definitive cause for the battery explosions and resulting fires has been identified by Samsung. Preliminary reports indicated the smartphone’s problems stemmed from a manufacturing flaw that pushed together the positive and negative cells of the battery, causing it to overheat. However, an article in the October 11 issue of The New York Times states that Samsung testers have been unable to reproduce the explosions described by consumers. This includes both the smartphones initially recalled in September and the replacement phones, which incorporated Li-ion batteries from a different supplier.

Because the explosions continued after Samsung changed battery suppliers, it now appears that the Li-ion battery may not have been the root cause. According to an article in the Financial Times, the same day as the NYT article, another theory has emerged. “According to one person who has spoken to Samsung executives, problems with the phone appeared to have arisen from tweaks to the processor to speed up the rate at which the phone could be charged.” But it may be some time before we learn the real root cause, because company insiders previously said Samsung would not comment before a thorough investigation had been conducted.

Estimated Costs

There are several dimensions to the total cost Samsung and its shareholders will absorb due to the initial recall and subsequent cessation of Galaxy Note 7 production. In an October 14 statement, Samsung estimated that the recall of its Galaxy Note smartphone will cost the company as much as $3 billion over the next several quarters. According to the statement, “The company already allocated the expected direct cost from the discontinuation of Galaxy Note 7 sales in its third quarter earnings guidance revision announced on Oct. 11, but expects the drop in revenue from the discontinued sales to continue to have a negative impact on operating profit for the next two quarters.”

After the initial recall, Forbes wrote in a September 13 article, “Samsung’s stock has declined by roughly 5% since the recall was announced earlier this month, wiping off over $10 billion of the company’s market cap.” On October 11, the Financial Times updated the cost, “More than $19 [billion] was wiped off the company’s market value amid growing fears the safety issues around the Note 7 could damage the group’s reputation and have an impact on the group’s other consumer products.”

The October 14 statement says that, “Moving forward, Samsung Electronics plans to normalize its mobile business by expanding sales of flagship models such as the Galaxy S7 and Galaxy S7 edge.” But what if it can’t? What if the damage to Samsung’s brand reputation spreads to other mobile devices? Returning to The New York Times article, it concludes:

Perhaps more worrisome is how people may lose trust in the Samsung brand. An editorial in South Korea’s largest newspaper, the Chosun Ilbo, said: “You cannot really calculate the loss of consumer trust in money.” It said that Samsung must realize that it “didn’t take many years for Nokia to tumble from its position as the world’s top cellphone maker.”

The Role of the Li-ion Battery

It now appears that the battery may not have been the root cause of the Galaxy Note 7 debacle. None the less, it is the inherent explosive nature of a Li-ion battery that makes an otherwise benign electronic malfunction in a mobile device a substantial safety hazard. As a result, several additional actions have been taken in light of Samsung’s decision to stop production and recall all devices.

On October 14, the U.S. Department of Transportation issued an emergency order that Note 7 devices may not be carried on board or packed in checked bags on flights to and from the United States or within the country. The phones also can’t be shipped as air cargo. In addition, some airlines are taking extra steps to prevent a disaster in case a passenger’s device powered by a Li-ion battery catches fire during flight. At least three U.S. airlines are adding new fire-suppression equipment to fleets in case a cellphone or laptop battery overheats, catches on fire and can’t be extinguished. Finally, Samsung is asking owners to return their phones by ground mail (not air) using a special return kit the company will supply. The kit includes “an instruction sheet, a thermal-insulated box, and a pair of gloves.”

A Safer Li-ion Battery

I’ve written about the reason the conventional Li-ion battery has a perpetual safety problem. It originates from Sony’s decision to produce the Li-ion battery in the same manner as magnetic audio tape. Basically, conventional Li-ion design and production creates inherent friction between the goals of increasing energy density and improving safety. As one battery expert put it, “…when you improve one aspect, you compromise other aspects.”

At Enovix, we’re taking a very different approach to Li-ion battery design and production. Our combination of 3D cell architecture, photolithography and wafer production will decouple energy density from safety. As a result, it will enable us to produce a battery with significantly increased energy density and a resistance to thermal runaway for a safer, high-energy Li-ion battery.