Samsung has abandoned sales and production of its Galaxy Note 7 flagship smartphone, after both the original and replacement versions suffered from battery problems that reportedly led to incidents of overheating and fires.
On 10 October, the company said it had asked its partners to stop all transactions with the latest Galaxy Note 7 device while the company looks into new reports of safety problems. The company said it is working with the US Consumer Product Safety Commission (CPSC) to investigate recently reported cases of the phone overheating.
Within a day, the Korean company said it was also halting production of the smartphone. Samsung said in a filing with South Korean regulators that it would permanently cease production and sales of the device, the Wall Street Journal reported from Seoul. "Taking our customer’s safety as our highest priority, we have decided to halt sales and production of the Galaxy Note 7," the company said.
Samsung added that consumers with an original Galaxy Note 7 or replacement Galaxy Note 7 should power down the device and either seek a refund or replacement.
The company's announcement follows several carriers in the US halting sales on their own, due to safety concerns. Samsung already recalled the original Galaxy Note 7 in early September and now it appears its replacement also will have a short life.
Daniel Kim, a Seoul-based analyst for investment bank Macquarie, estimated that the potential losses to Samsung could reach KRW 3.1 trillion (USD 2.8 billion) for the last three months of the year, which would be enough to erase the entire mobile division’s operating profits for the fourth quarter.
Samsung has yet to comment on the expected financial impact from the failed phone. Its preliminary forecast for the third quarter was for a small increase in group operating profit. More recently the company has been selling a range of investments and assets, which is thought to be shoring up its cash position and bottom line while it deals with the recall.
In mid-September, the company also promoted Jay Y. Lee to its board of directors. Lee is the son of Samsung Chairman Kun-Hee Lee and is considered the likely successor as head of the Korean group; he already serves as vice chairman.
