SEOUL, Sept 3 – Samsung Electronics Co Ltd announces worldwide recall of new Galaxy Note 7 smartphones after reports of the device catching fire while charging. All Galaxy Note 7 smartphones equipped with batteries it has found to be fire-prone and halted their sales in 10 markets, denting a revival of the firm’s mobile business.
Koh Dong-jin, head of the South Korean company’s smartphone business, declined to comment on how many phones needed to be replaced, but said Samsung had sold 2.5 million of the premium devices so far. Speaking at a news conference on Friday, Koh expressed regret over the recall, which will affect markets including South Korea and the United States.
Models in China feature a different battery and are not being recalled by Samsung, the world’s biggest smartphone vendor. The recall comes just over two weeks after the company launched its latest premium phone, which features an outsized screen and high-resolution camera. It follows reports of the 988,900 won ($885) phone igniting while charging.
The manufacturer plans to replace not only phones with faulty batteries sold to consumers, but also retailer inventories and units in transit. Nomura estimated that more than 1 million units have been sold to end consumers. Koh said he can’t comment on exactly how much the cost will be, but it pains his heart that it will be such a big number.
Strategy Analytics said the combined cost of the recall and lost sales would lop $5 billion off Samsung’s smartphone revenue this year and cut smartphone profit margin by 1.5 percent. 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 Inc, the nature of the problem for the Galaxy Note 7 is a serious blow to Samsung’s reputation, analysts said. The company should act quickly to minimize damage to its smartphone recovery, after a string of product successes had reversed a fall in market share, they added. — Reuters