Samsung stops sales of Note7 amid risk of exploding batteries

However, sales of the device in Hong Kong, Macau and mainland China will continue

PUBLISHED : Friday, 02 September, 2016, 8:27pm
UPDATED : Friday, 02 September, 2016, 8:27pm

Samsung Electronics, the world’s largest supplier of smartphones, has called a halt to sales of its flagship Galaxy Note7 worldwide amid reports of the device’s battery exploding when it is charged.

“As of September 1, there have been 35 cases that have been reported globally and we are currently conducting a thorough inspection with our suppliers to identify possible affected batteries in the market,” Samsung said in a statement released Friday afternoon.

“Because our customers’ safety is an absolute priority at Samsung, we have stopped sales of the Galaxy Note7. For customers who already have Galaxy Note7 devices, we will voluntarily replace their current device with a new one over the coming weeks.”

Koh Dong-jin, the president of Samsung’s mobile communication business, said at a press briefing in Seoul on Friday: “We have produced around 2.5 million units so far and plan to recall all of them.”

It marks the first time that Samsung has made a large-scale recall of a smartphone.

However, the company’s approach in Hong Kong, Macau and mainland China, appears to contradict Koh’s statement.

A Samsung spokeswoman said the sale of Samsung Galaxy Note7 “at our authorised resellers or distributors in Hong Kong and Macau is not affected”.

According to Hutchison Telecommunications Hong Kong, its Three mobile network started offering the Note7 on Friday and will continue sales based on Samsung’s direction.

And in a CCTV interview on Thursday, a Samsung spokesman said Note7 devices for the mainland market are equipped with another batch of batteries, not the faulty ones.

Gartner analyst Sandy Shen said Samsung “has left the decision on replacements to consumers”.

Koh said Samsung worked “with two or three battery makers and the problem was found in only one of them”.

Although details of Samsung’s investigation are not available, BNP Paribas analyst Peter Yu said South Korean reports are blaming Seoul-based ITM Semiconductor for the dodgy Note7 batteries.

“Lithium-Ion battery cells need a protection circuit module (PCM) to regulate charging or discharging, and a faulty PCM could lead to overcharging of battery cells, which can lead to fires,” Yu said. “ITM Semiconductor makes the PCM and does the packaging service, potentially making it a target for recall [by Samsung].”

Bryan Ma, a vice-president at research firm IDC, said the battery issue has hurt Samsung’s lead time to build Note7 demand ahead of Apple’s launch of the next iPhone this month. “I suspect Samsung will be able to get back on its feet within a year,” Ma added.

I suspect Samsung will be able to get back on its feet within a year
Bryan Ma, a vice-president at IDC

According to Samsung, it had sold 600,000 units of the Note7 in the 10 markets in which the device was first made available from August 19.

The prospects for Samsung’s smartphone business is likely to remain challenging as it competes against more aggressive mainland Chinese brands.

In a report on Friday, Strategy Analytics director Linda Sui predicted telecommunications equipment giant Huawei Technologies will surpass Samsung as the largest smartphone supplier in the Asia-Pacific from next year.

Samsung sold 77 million smartphones in the second quarter to remain the world’s top supplier of these devices, with a 22.4 per cent global market share, according to IDC data.