South Korean technology giant faces the risk of losing market share to rival Apple's iPhone if problem with batteries is not fixed quickly.
Samsung's smartphone fans would be disappointed to know that shipments of Galaxy Note 7 phablets have been halted after reports emerged that batteries of a few phones exploded while they were being charged.
Some of the smartphones, put up for sale globally last month, also face possibility of being recalled as the company on Thursday said it was trying to figure out what went wrong with its hugely anticipated device.
This could be a blow to South Korean technology giant, which has lately struggled to make money from its smartphone business.
The controversy couldn't have come at a worse time as Note 7 was launched to counter new iPhone's introduction expected next week.
"This is some major buzz-kill for Samsung, especially given all of the hard-earned excitement that products like the Note 7 have been garnering lately," IDC analyst Bryan Ma told Reuters.
"The pending Apple launch puts all the more pressure for them to contain this quickly. The timing of this couldn't have been worse."
It all started after people posted pictures and videos of charred Note 7 phones online that they said had exploded and melted as they were being charged.
"Be careful out there, everyone rocking the new Note 7, might catch fire y'all," one user said in a YouTube clip showing a burnt Note phone.
While most news outlets were referring to only two confirmed incidents, the South Korean news agency Yonhap said there have been 5 such claims in South Korea and elsewhere.
Samsung says shipments were stopped to three South Korean mobile carriers – SK Telecom, KT Corp and LG Uplus – earlier this week.
The delay affects only the South Korean market, a Samsung spokeswoman Sophia Kim told AP.
But Ian Morris of Forbes.com said that a UK retailer might have also stopped sales while the matter is investigated.
A Samsung official confirmed to Yonhap that the cause of the reported explosions has been traced to the battery of the new phablet.
"The most important thing is the safety of our customers and we don't want to disappoint our loyal customers."
The official also said problematic phones make up only 0.1 percent of the sold volume, meaning it won't be a major headache for the company to recall the phones if it decided to do so.
Galaxy Note 7 is Samsung's premium product priced at over $800. Along with the usual smartphone functions, it comes with an added security feature – the iris scanner, appreciated in various reviews by the privacy conscious users.
It is called a phablet because of being a cross between a smartphone and tablet.
While there was plenty of speculation about the reasons behind the battery explosions and meltdowns, online sleuths suggested the problem might be related to phone's charger and its cord.
This isn't the first time that reports of smartphone batteries catching fire have surfaced. In past, sudden battery explosions have severely injured users and even killed some.
And Samsung is not the only company to have suffered the consequences. Many Apple customers have reported similar cases.
Experts say such explosions are normally linked to the situation where the battery or charger in use are not original.
Last year, production issues for the curved displays for the Galaxy S6 edge model resulted in disappointing sales, and Samsung risks a repeat this year if it cannot address the Galaxy Note 7 problems quickly.
Its mobile profit is on track to post annual growth for the first time in three years, thanks to robust sales of the Galaxy S7 and S7 edge devices that it launched in March to critical acclaim.
The Galaxy Note 7 received similar praise, raising expectations for strong sales in the second half.
Samsung said in August demand for the new handset was far exceeding supply, pushing the firm to delay the launch in some markets.
Author: Saad Hasan