Samsung Galaxy Note 7: What Went Wrong
Samsung Electronics Co. Ltd. is stopping production of the Galaxy Note 7, one of its most popular smartphones, after being unable to halt a rash of spontaneous fires and explosions.
How many consumers are affected?
In September, the company recalled 2.5 million of the devices to replace batteries that were catching on fire, but after reports replacements also burst into flames, the company discontinued the product. Estimates are that four million of the devices were sold worldwide.
“ [We] have decided to halt production and sales of the Galaxy Note 7 in order to consider our consumers’ safety first and foremost,” the South Korean firm said in a filing to the Seoul stock exchange.
Starting on Oct. 13, at their point of purchase, Samsung Note 7 owners can bring their device in for an exchange to a Galaxy S7 or Galaxy S7 edge device or a full-device hardware and Note 7-specific accessories refund.
How much will this cost Samsung?
Investors burned off $20-billion (U.S.) of Samsung Electronics’ market value on Tuesday as its shares closed down 8 per cent, the biggest single-day decline since 2008. The company expected to sell upwards of 12 million Note 7s, and analysts at Nomura Holdings Inc. have predicted that if the model cannot be rehabilitated and sold to consumers, it could cost Samsung $5-billion in operating profit.