Monday, October 10, 2016

THE SWAN SONG OF SAMSUNG: production suspended of the troubled Galaxy Note 7 model amid reports that replacement devices had caught fire.

Samsung Galaxy Note 7 crisis deepens with reports of production halt

The decision reported by South Korean news agency Yonhap follows repeated problems with the new device
A Samsung Note 7 handset is pictured next to its charred battery after catching fire during a test at the Applied Energy Hub battery laboratory in Singapore. The company has now suspended production of the phone. Photograph: Edgar Su/Reuters

Samsung’s smartphone recall crisis has deepened after South Korean media said the tech giant had suspended production of its troubled Galaxy Note 7 model amid reports that replacement devices had caught fire.

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Citing an unnamed source at a Samsung supplier, the news agency Yonhap said the company on Monday decided to halt production of the smartphone, one of the most advanced and expensive products of its kind on the market.

The unprecedented halt in production is another blow to Samsung, which last month announced the global recall of at least 2.5m Galaxy Note 7 smartphones due to faulty batteries that caused some of the phones to emit smoke or catch fire.

Social media images of photographs of charred Note 7 phones have only added to the humiliation felt by Samsung, an iconic South Korean firm that has built a reputation for innovation and quality since entering the consumer electronics market in the late 1960s.

Two US mobile carriers have said they will stop issuing new Galaxy Note 7 smartphones after recent reports of replacement devices emitting smoke or bursting into flames.

In one incident, passengers were evacuated from a Southwest Airlines flight in Kentucky earlier this week after a replacement Note 7 started smoldering and making “popping noises” soon after its owner boarded the plane.

AT&T said on Sunday it would stop exchanging new Note 7 smartphones due to reports of fires from replacement devices that Samsung said contained safe batteries.

T-Mobile said it was temporarily halting sales and exchanges of new Note 7s. South Korea’s largest mobile carrier, SK Telecom, said it was monitoring the situation, while KT Corp, the country’s No.2 carrier, said it had taken no action on new Note 7 sales or exchanges.

“This measure includes a Samsung plant in Vietnam that is responsible for global shipments (of the Galaxy Note 7),” Yonhap quoted the source as saying.

Samsung has yet to comment on the Yonhap report.

The latest problem with the Note 7 will frustrate Samsung’s attempts to repair its battered reputation and result in severe financial penalties, with some analysts predicting that the worst recall crisis in the firm’s history could cost it US$5bn in revenues.

“I thought the Note 7 matter was coming to an end, but it’s becoming an issue again,” said CJ Heo, a fund manager at Alpha Asset Management. Heo said he expected Samsung to recover from short-term damage to its reputation, but added that the recall crisis would hit fourth-quarter sales of the Note 7.

Despite the recall, Samsung said last week that its third-quarter profit rose 6 percent to about $7bn on total sales of $43.9bn, thanks to income from Samsung’s other products.

The company sold 76m smartphones in the second quarter of 2016, most of them lower-priced models.