After reports of replacement devices catching fire, here comes another setback for the South Korean giant. According to the reports from South Korean media, Samsung has halted production for its flagship smartphone — Galaxy Note 7, amid reports of battery fire.
The company seems to have taken this extreme step of halting production of its latest smartphone after reports of replacement devices bursting into flames came to light. A report from news agency Yonhap suggests that the company has decided to halt production of the smartphone, which is one of the most advanced and expensive products in the market.
The production halt shows the seriousness with which Samsung is dealing with its largest-ever product recall. Last month, officials of the company shrugged off reports of overheated batteries, calling the incidents “isolated cases” related to issues of mass production.
While Samsung hasn’t officially confirmed plans to stop production of the Note 7, the company earlier said that that it was “working diligently with authorities and third party experts” to investigate the problem. The company further added that “if we determine a product safety issue exists, Samsung will take immediate steps approved by the [Consumer Product Safety Commission] to resolve the situation.”
This is a major blow to Samsung. Last month, Samsung had announced the global recall of at least 2.5 million Galaxy Note 7 smartphones due to faulty batteries that caused some of the phones to emit smoke or catch fire. This recall has costed the Korean giant a heartbreaking amount, and has also deplted over 30 billion from its market value.
After recent reports of replacement devices emitting smoke or bursting into flames, two US mobile carriers — AT&T and T-Mobile have said they will stop issuing new Galaxy Note 7 smartphones to the customers.
With this extreme step taking by the company, it will further frustrate Samsung’s attempts to repair its battered reputation. Apart from that, this could also result in severe financial penalties. Some analysts are predicting that the worst recall crisis in Samsung’s history could cost it $5 billion in revenues.
The Note 7 issue comes at the worst possible time for Samsung. Apple has recently launched its iPhone 7 and iPhone 7 Plus in India, and it seems to be faring quite well. Also, with the festive season ending soon, Samsung has missed out on one of the biggest sales events in India.
Despite the issues with its flagship smartphones and recall, Samsung announced last week that its third-quarter profit rose 6 percent to about $7 billion on total sales of $43.9 billion. The company has sold around 76 million smartphones in the second quarter of 2016. However, most of them lower-priced models.