Samsung tells customers to power down the Galaxy 7

The South Korean company asks global partners to stop sales as it halts production of the smartphone. The moves comes after replacement devices exploded within days of customers receiving them.

Photo by: Reuters
Photo by: Reuters

Investors wiped $13.2 billion off Samsung Electronics' market value at mid-day trade on October 11 as shares tumbled seven percent to touch their two-week low.

Updated Oct 11, 2016

Samsung Electronics halted sales and replacement of Galaxy Note 7 smartphones on Tuesday and told owners to stop using them while it investigates reports of fires. The move caused the market to speculate that the South Korean tech giant will scrap the flagship device.

China's quality watchdog said on Tuesday Samsung's local unit will recall all 190,984 Note 7 phones that it has sold in the mainland. Top US and Australian carriers suspended sales or exchanges of the Note 7s. Aviation authorities banned passengers using the phones after smoke from a replacement device forced the evacuation of a plane in the United States last week.

"Consumers with either an original Galaxy Note 7 or replacement Galaxy Note 7 device should power down and stop using the device," Samsung said in a statement available on its website.

The top smartphone maker said it had asked all global carriers to stop sales of the Note 7s and the exchange of original devices for replacements, while it worked with regulators to investigate the problem.

Samsung's decision to pull Note 7s off the shelves for the second time in less than two months not only raises fresh doubts about the firm's quality control but could result in huge financial and reputational costs.

Investors wiped $13.2 billion off Samsung Electronics' market value at mid-day trade on Tuesday as shares tumbled 7 percent to touch their two-week low. The latest recall could cost the company as much as $17 billion according to analysts at Credit Suisse.

A case of exploding batteries 

Samsung has struggled since issuing a global recall in early September for 2.5 million of its flagship "phablet" following complaints that the lithium-ion battery exploded.

It faced additional heat when a number of its washing machines were reported to have exploded. 

It ordered new batteries from another supplier and started shipping replacements to customers just two weeks later. But similar problems arose with a replacement Note 7 on October 5 inside a Southwest Airline flight in the United States.

The replacement model of the fire-prone Samsung Galaxy Note 7 smartphone belonging to Brian Green who was travelling in a Southwest Airlines plane on October 5, 2016.


TRTWorld and agencies