Nokia said there were about 100 cases of overheating globally, with no reports of serious injury or damage to property.

The batteries "could potentially experience overheating initiated by a short circuit while charging, causing the battery to dislodge," Nokia said in a statement.

The affected Nokia-branded BL-5C batteries were made by Matsushita Battery Industrial between December 2005 and November 2006, Nokia said.

Nokia's shares dipped on the news and were 1.2 percent lower at €22.35, or $30, in early trade. Matsushita shares closed unchanged at ¥2,120, or $18, on the Tokyo Stock Exchange before the announcement.

Matsushita Electric will discuss replacement costs with Nokia, said Akira Kadota, a spokesman in Tokyo for the Osaka-based company.

The latest incident builds on a series of recalls in the past year that have drawn attention to quality at Japan's electronics makers. In August 2006, Sony began replacing 9.6 million notebook computer batteries, then the biggest recall in consumer electronics history.

A rechargeable cellphone battery may cost about ¥300 to ¥450 to produce, said Haruo Sato, an analyst at Tokai Tokyo Securities who covers companies including the battery maker NEC Tokin and Softbank, Japan's third-biggest cellphone operator.

Based on Sato's estimate, Matsushita may incur expenses of at least ¥13.8 billion, or $117 million.

"The supplier is responsible for quality," said Arja Suominen, a Nokia spokeswoman in Helsinki. It was too early to estimate the potential cost or how many batteries would be replaced, she said.

Nokia said consumers with the batteries could ask for replacements.

The company sold 101 million cellphones in the second quarter, a 29 percent increase from a year earlier.

Nokia said that Matsushita would pay part of the cost of replacing the millions of batteries.

Matsushita said there had been a rare problem in the manufacturing process, adding that the cost of the recall was still uncertain.

"We are still in discussion with Nokia about how to divide the replacement cost," said Kadota, the Matsushita spokesman.

"At this moment, we cannot calculate what the effect will be on earnings," he said.

Sony plans to invest 150 million Singapore dollars, or $99 million, in Singapore to build a plant producing lithium ion polymer batteries used in notebook PCs and mobile phones, which will open next August, Reuters reported from Singapore.

Sony also forecast that global demand for lithium ion batteries would grow by 11 percent a year between now and 2010. The forecast comes less than a month after Toshiba recalled 10,000 Sony-made PC battery packs due to fire risks.

Annual demand for lithium ion batteries will reach 3.2 billion cells by 2010, from 2.1 billion cells in 2006, said Hirokazu Kamiyama, senior general manager at Sony's energy business group.

written by Reuters
found on iht.com