Samsung Electronics Co. has decided to diversify the supply chain on batteries powering its smartphones as well as other parts after its disgraceful fallout with explosion-prone Galaxy Note7 and may team up with LG Chem, battery maker for local rival LG Electronics.

Sister company Samsung SDI supplied more than 60 percent of the batteries fitted into Galaxy Note7 and the rest by China’s Amperex Technology Limited (ATL). ATL was the primary supplier for the replacement phones.

“We are reviewing plans to diversify our component suppliers in many areas including the battery field. We are thinking of striking supply contracts with LG Chem in a range of components from adhesives for touchscreen and display to battery cells,” said a high-ranking Samsung Electronics official who asked to be unnamed on Wednesday.

Samsung Electronics and LG Chem reportedly are having working-level discussions on installing the LG Chem batteries in Samsung’s new flagship phones to be released from next year. Selecting a component usually takes at least six months to test compatibility to the device.

As of the June-quarter, ATL leads the market in global lithium-polymer battery primarily used to power smartphones with a share of 20 percent, followed by Sony with 18 percent, Samsung SDI with 11 percent. LG Chem is ranked the fifth with 10 percent share.

Samsung Electronics that has relied on only two battery suppliers had trouble addressing to the fire-prone battery problem as it had limited option for replacements.

Two electronics archrival Samsung and LG have maintained tradition of staying away from each other even though they both have expertise in components. A rare case was Samsung Corning Precision Glass Co., former liquid crystal display (LCD) glass arm of Samsung Group supplying LCD glass substrates to LG Display. They even terminated contracts with parts makers upon learning they supply components to both set producers.

LG Chem and Samsung previously had attempted partnership in display polarizer plate and other main parts that did not materialize.

As of 1:30 p.m., LG Chem shares rose 6,000 won or 2.45 percent to 250,500 won ($222.39) while Samsung SDI shares remained unchanged at 93,500 won from the previous session.

By Song Sung-hoon and Lee Dong-in

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]