How Samsung’s recent product malfunctions will impact Austin facility

FILE - In this July 28, 2016, file photo, a color blending feature of the Galaxy Note 7 is demonstrated in New York. An overheated Samsung device created smoke that caused a plane to be evacuated at Louisville International Airport on Wednesday, Oct. 5, 2016 an official said. The smoke prompted Southwest Airlines to evacuate the plane before it departed for Baltimore, Louisville Metro Arson Capt. Kevin Fletcher told news outlets. (AP Photo/Richard Drew, File)

AUSTIN (KXAN) — Samsung is done with the Galaxy Note 7 phone.

Last month, it recalled millions of the phones after some caught fire. Then, batteries in the replacement phones started exploding.

The Samsung facility in Austin makes components for all of the company’s smart phones. KXAN’s John Dabkovich talked to a tech industry analyst to get an in-depth look at the possible fallout for local workers.

Patrick Moorhead says, “The bigger picture here is how Samsung deals with the problem, which could affect products that are manufactured here in Austin.”

Q: When you say ‘how Samsung deals with it,’ what do you mean by that?

A: The reality is with any complex products, whether it’s electronics like phones or TVs and even cars, everybody has recalls. It’s how you deal with the recall not the recall itself. So, Samsung needs to be very careful in what they say going forward.”

Q: Basically, if they taint the entire brand that’s when we could see an effect here in Austin?

A: That’s exactly right. Here in Austin they make processors and memory that are in a lot of different devices. Overall, if the Samsung brand is tarnished, that impacts the demand for products that are made here in Austin.

Q: By basically punting on this line of smartphones, can you put a dollar amount on the cost to the company?

A: The biggest expense is for phones they’ve made already today. So, overall you’re looking to Samsung at about $5.7 billion. It’s a little harder to tell here in Austin. Samsung likes to protect their privacy and confidentiality. So, we don’t know exactly — specifically the part that they make here.

Moorhead says Samsung is strong enough to take that kind of hit to its balance sheet. Still, the stock closed down almost eight percent Tuesday, wiping away an estimated $18 billion of the company’s total value. provides commenting to allow for constructive discussion on the stories we cover. In order to comment here, you acknowledge you have read and agreed to our Terms of Service. Users who violate these terms, including use of vulgar language or racial slurs, will be banned. If you see an inappropriate comment, please flag it for our moderators to review.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s