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Samsung to suspend production of smartphone

October 10, 2016

The OEM has suspended the production of the Galaxy Note 7 after replacement devices caught fire.

samsung reported that the decision came following “repeated problems with the new device” and the South Korean news agency, Yonhap, reported that “replacement devices had caught fire” with one of the replacements igniting on a US aeroplane and the passengers evacuated. Yonhap cited an “unnamed source at Samsung supplier” who said that the company had decided to “halt the production of the smartphone”. The company already had (https://www.therecycler.com/posts/samsung-halts-note-7-smartphone-sales/) to recall 2.5 million Galaxy Note 7 smartphones due to “faulty batteries” that caused the phones to “smoke or catch fire”.

Samsung’s reputation has been “hurt” by the photos on social media of the burnt-out phones, and the fact that two US mobile phone providers have said that they will “stop issuing new Galaxy Note 7[s]”. The company has been producing “consumer electronics” since the 1960s, and has “built a reputation for innovation and quality” since then.

Some mobile phone companies such as AT &T said that they would “stop exchanging new Note 7 smartphones” because there were reports that replacement phones were also catching fire, and T-Mobile said that it “would temporarily” halt sales and exchanges. South Korean company SK Telecom said it would “monitor the situation”, while KT Corp said “it had taken no action” on the sales or exchanges of the Note 7 smartphone.

Yonhap said that their source had commented: “This measure includes a Samsung plant in Vietnam that is responsible for global shipments (of the Galaxy Note 7).” The OEM has not commented on the Yonhap report.

The recall of the phones is predicted to potentially cost the company $5 billion (€4.4 billion), and CJ Heo, Fund Manager at Alpha Asset Management, added that “I thought the Note 7 matter was coming to an end, but it’s becoming an issue again”, and also commented that he “expected Samsung to recover from the short term damage to its reputation” but felt that the “recall crisis” would be detrimental to “fourth quarter sales” of the Note 7.

Third quarter profit for Samsung rose six percent to about $7 billion (€6 billion) on its total sales, but this was due to income from its other products (https://www.therecycler.com/posts/samsung-expects-quarterly-profit-jump/). Samsung “sold 76m smartphones in the second quarter of 2016, most of them lower-priced models”.

 

 

 

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