As a disclaimer: This blogpost is pure speculation rife with theories and hypotheses unconfirmed by hard facts (scientific or otherwise), much of which is original research. Neither do I know very much about how smartphone screens are made, and my knowledge of chemistry and physics is lacking. Many of the claims are qualified with terms, such as "likely", "possible", "probable", and so on. The intention of the post is to ruminate over what caused the fires, since finding the cause would be in the best interests of Samsung, other smartphone makers, and the public at large. In addition, I'm a user of two Samsung phones, one of which is a smartphone.
I began looking for news articles about Samsung Galaxy Note 7 and magnets, and came across this one from August 22, 2016 published by Korea Joongang Daily:
"Samsung’s Galaxy Note 7 is marvel of waterproofing".
The article explains, that:
The Note 7 and its S-Pen can work under water, because the phone's LCD and the S-pen respond to one another through a magnetic field in much the same way pieces of iron move in the direction of a magnet, when said magnet and iron pieces are separated by paper.Further:
Even with water between the display and the S-Pen, the device "recognizes and responds to the S-Pen’s magnetic field."
My conclusion is,that the phone battery was susceptible to magnetism, because it wasn't sufficiently protected from magnetism inside the phone, where the S-Pen was housed. The additional reason could be, that the internal phone battery, apart from some plastic, seemed (according to teardown photos) to lack any other protective material to shield it from magnetism.
All this suggests, that the Note 7's LCD is a magnet, and the S-Pen is, too, and the battery in the phone is still about the same in terms of its own housing as used in earlier models.
This is based on the assumption, that the housing of this kind of internal battery has not changed much from earlier internal Galaxy Note and Galaxy S batteries. The fact, that batteries with similar housing didn't combust in earlier Galaxy models, was because magnets (or magnetism) were not used in the screen and the new S-Pen.
The possible design mistake in the Note 7 is, that the engineers probably forgot to account for the fact, that the battery, with its usual housing, was susceptible to magnetism that emanated from the phone's screen and the S-Pen, either during use or when idle.
Samsung won't refurbish the recalled devices, and won't reuse its components.
Whether the magnetic screen and the magnetic S-Pen are the reasons for fires in the batteries, is unknown. Whether Samsung is currently aware of these as the underlying issue(s), is also unknown. And if it is, the public should know when the company first realised this.
If I were a mobile phone manufacturer, and realised, that the magnetic screen and stylus were affecting the batteries, then as a matter of business, I would halt production of this model of device, and choose not to refurbish or reuse the magnetic screen and pen that would adversely affect any normal battery that's close by.
The most widespread photos of exploded Note 7 models show, that it was the screens that burned through the most, but not the backsides of the poor phones. Investigating the burned phones for the direction of the burns and fires should confirm this. Granted, the backsides of the phones were made of metal and other materials that were stronger than the screens, and explosions and fires would move towards the area that would first give way.
Another interesting thing that the photos of burned Note 7 phones show, is that the screens burned through completely at the location of the batteries. Part of this burn-through could be attributed to extreme heat from the burning batteries, but I'd imagine, that the displays, made of mostly glass, would stay intact.
I do not know, whether it was the S-Pen, or the screen, or both that were ultimately culpable for affecting the batteries.
No issues were probably found in testing, because the effect of the magnets was not immediate.
I can imagine, that both the phone and the S-Pen were developed by separate teams, and I think it inconceivable, that the S-Pen was never inside the phone during testing, or that they were not tested in conjunction.
The U.S. Consumer Product Safety Commission would be very smart to subpoena the carriers and Samsung for lots of Note 7 devices (not just tens, but more) to find out independently what went wrong.
In addition, The Times of Malta reported, that "a team scientists at New York University led by Alexej Jerschow, developed a magnetic resonance imaging (MRI) technique to see inside the batteries as they are charging."
This new method could be used at the behest of the U.S. Consumer Product Safety Commission to investigate the extant Galaxy Note 7 devices—both original ones, and replacements. Care should be taken with the fact, that the screen and the S-Pen of Galaxy Note 7 phones are themselves magnetic.