Supply Chain Reaction

Sony isn’t the only company feeling the heat from battery issues. Matsushita today said that its recently announced lithium-ion battery blunders could cost it up to $172 million.

The Japan-based company is the latest to announce a battery overheating threat. In mid-August, Nokia said approximately 46 million BL-5C lithium-ion battery pack units made by Matsushita may cause overheating initiated by a short circuit while charging, which could cause the battery to dislodge from a mobile phone handset.

There are three upsides here for Matsushita: First, it’s much better that the overheating occur while charging than while in use and cozied up to a consumer’s ear; second, $172 is chump change compared to the $421 million Sony could end up facing in replacement costs for its laptop lithium-ion battery recalls; and third, it’s Nokia that will really feel the fallout from this.

While from a tech perspective, the issues are on Matsushita’s end, it will be Nokia that really gets burned. General consumers – non-techie experts – won’t go to their local electronics chain store shopping for a new cell phone and think, “Oh, I should stay away from Matsushita’s lithium-ion batteries,” especially when most consumers know the brand Panasonic, not Matsushita. Instead, they’ll see news reports, hear “Nokia” and pass on that brand of mobile phone, adding fuel to Nokia’s competitors’ sales.

Gartner this week reported Nokia held nearly 37 percent mobile phone market share, placing it at number one above Motorola in Q2. It will be interesting to see how this and competition from the iPhone influence Gartner’s rankings for Q3 and the holiday consumer electronics supply chain.

For more details, see our news story “Matsushita estimates Nokia-branded lithium-ion battery costs of up to $172M” and for more information about the safety of lithium-ion batteries, see PowerSource, a blog by EDN Technical Editor Margery Conner.

Meanwhile, have a thought on what brands are feeling the heat from battery bungles or on the mobile phone supply chain? Post it below.