Update | Samsung permanently shuts Note 7 production
Analysts expect the South Korean tech giant to spend US$1.43b to wind down and dispose of the smartphone, deemed a potential safety risk
Beleaguered Samsung Electronics said it has permanently halted all production of its Galaxy Note 7 amid increased concerns of the device catching fire, which has imperilled the company’s smartphone business and severely damaged its global brand.
The South Korean technology giant may be looking to stave off a meltdown of its smartphone sales in the second half of this year by ramping up production of another premium model, as analysts said the company would need to shell out more than US$1 billion to dispose its stock of Note 7 devices.
Its shares fell 8 per cent on Tuesday, erasing about US$17 billion in market value.
“We recently readjusted the production volume for thorough investigation and quality control, but putting consumer safety as top priority, we have reached a final decision to halt production of Galaxy Note 7s,” Samsung said in a statement on Tuesday.
That followed the company’s announcement earlier in the day that it has stopped the global sale and exchange of Note 7 devices, while regulators investigated recent multiple incidents of replacement units overheating and catching fire.
I think the Note 7 is the best smartphone this year, minus the exploding batteries ... I will continue using it, despite the recall
Samsung issued its first recall of 2.5 million Note 7 smartphones on September 2, when senior management blamed faulty batteries supplied by its subsidiary for about 35 reported cases of exploding Note 7s at that time. The company launched the model in mid-August.
