Samsung Electronics has acknowledged fault in battery of its flagship Galaxy Note 7 smartphone and has decided to recall the premium device from 10 markets including South Korea and the US.
Customers who have already bought the phones would be able to swap it with new ones, the South Korean company said, after reports of Note 7 batteries exploding during and after charging.
Samsung didn't say how many of the 2.5 million smartphones already sold are affected but a senior company executive told reporters that only those with faulty batteries are being recalled.
"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 Dong-jin, head of Samsung's smartphone business, said at a press conference on Friday.
The recall comes just over two weeks after launch of Note 7 phone, which features an outsized screen and high-resolution camera. It also has a new security feature of an iris scanner.
Models sold in China use a different battery and are not being recalled by Samsung, the world's biggest smartphone vendor.
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.
In last few days, people from various countries posted pictures and videos online that showed charred phones believed to have been result of battery faults.
Samsung said it was aware of 35 reports of affected Note 7 batteries.
In 2007, the largest battery recall in consumer electronics history took place when Nokia, then the world's top mobile handset maker, offered to replace 46 million phone batteries.
Samsung was banking on Note 7 to help its smartphone business recover after a slowdown, especially as Apple is expected to release its latest iPhone next week.
New sales of the Note 7 in affected markets would resume after it deals with replacements, a process that begins in about two weeks, the company said.
HI Securities analyst James Song said the replacement costs may be somewhat limited as Samsung could recycle components of the recalled phones.
"It is clever for Samsung to replace the affected models, not offering fixes," he said, adding this would help consumer confidence.
Samsung's mobile division accounted for about 54 percent of the firm's January-June operating profit.