Samsung issues recall for Galaxy Note 7

SOURCEREUTERS

BELGRADE – Samsung Electronics will replace all Galaxy Note 7 smartphones equipped with fire-prone batteries and halt sales of the flagship product in 10 markets, Reuters reports.

Koh Dong-jin, head of the South Korean company’s smartphone business, spoke at a news conference jam-packed with reporters and cameras where he expressed regret at the recall, which will affect markets including South Korea and the U.S. – but not China, where models feature a different battery.

The announcement on Friday comes just over two weeks since the premium device’s launch, and follows reports of the 988,900 won ($885) phone igniting while charging.

The executive, who declined to comment on the number of phones needing replacement, said Samsung had sold 2.5 million of the premium devices so far. The manufacturer plans to replace not only phones with faulty batteries sold to consumers, but also retailer inventories and units in transit.

“I can’t comment on exactly how much the cost will be, but it pains my heart that it will be such a big number,” Koh said.

The scale of the recall is unprecedented for Samsung, which prides itself on its manufacturing prowess. While recalls in the smartphone industry do happen, including for rival Apple, the nature of the problem for the Galaxy Note 7 is a serious blow to Samsung’s reputation, analysts said.

Analysts said the firm must act quickly to minimize damage to its smartphone recovery, after a string of product successes had reversed a fall in market share at the world’s biggest smartphone vendor.

The firm has said it aimed for the Note 7 to maintain strong sales momentum in the second half of the year against stiffening competition from the likes of Apple, which is widely expected to release its latest iPhone next week.

“I am concerned more about a potential reduction in sales than recall costs,” said analyst Jay Yoo at Korea Investment & Securities. “The recall is likely to be a blow to earnings.”

Samsung said new sales of the Note 7 in affected markets would resume after it deals with replacements, a process it expects will begin in about two weeks. The firm would extend refund periods for affected customers and offer exchanges for other Samsung phones, Koh said.

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