Samsung to Recall Galaxy Note 7 Over Reports of Fires
September 02 2016 - 08:50AM
Dow Jones News
SEOUL—In one of the biggest global recalls of smartphones,
Samsung Electronics Co. said it would replace Galaxy Note 7 devices
because of reports of battery fires, dealing a blow to the
company's recovery efforts.
The company said it had halted sales of its Galaxy Note 7 phone
after receiving reports from customers of batteries exploding
during charging.
"It has been confirmed that it was a battery cell problem," Koh
Dong-jin, the head of Samsung's handset division, said.
Samsung said it had shipped 2.5 million units of the Galaxy Note
7 since its launch on Aug. 19. Mr. Koh declined to comment on the
estimated cost for the exchange program, but said that the amount
is so big "it almost breaks my heart."
The recall is also painful for Samsung because it tarnishes its
image ahead of the introduction next week of Apple Inc.'s
next-generation smartphones. Samsung has accelerated the launch of
its new phones in recent years to get a head-start on Apple.
Samsung, the world's biggest smartphone maker by shipments has
been relying on its Galaxy phones to drive the recovery of its
mobile business, which has been struggling for more than two years
amid strong competition from Apple and Chinese rivals.
Strong sales of the smaller flagship Galaxy S7 phone had helped
make the three months ended June Samsung's most profitable quarter
in nearly two years. At 16%, the company's mobile profit margin was
the highest since 2014.
Samsung said reservations and prepayments for the large-screen
Galaxy Note 7 were higher than for previous Galaxy phones.
The official said Samsung had registered 35 cases of the problem
in phones globally through its service centers and estimated that
24 phones in each batch of one million produced were faulty.
Consumers can also get a full refund for the device, he said.
Samsung's exchange program will be in effect in all 10 countries
where the device has been sold. The company said it would take
roughly two weeks to replace the phones given supply issues.
Samsung went ahead with the release of the Galaxy Note 7 in
China on Sept. 1 because batteries in phones sold there came from a
nonfaulty supplier, Mr. Koh said, adding that there is only one
battery supplier for each country.
Concerns about the phone began when social-media sites carried
photos and videos of scorched phones, with users saying they had
caught fire or exploded while charging.
On Wednesday, Samsung confirmed it had suspended shipments in
South Korea of the large-screen, waterproof Galaxy Note 7 to
conduct additional quality tests.
Major Australian carriers confirmed the phone had been withdrawn
from sale there on Friday.
Samsung said it would provide details of the exchange program
for the phone by country later. Mr. Koh said that Samsung is in
talks with vendors from various countries to come up with
individual plans.
Galaxy Note 7 devices can be exchanged in South Korea starting
Sept. 19. Starting Saturday, Samsung will roll out a
battery-monitoring service for Galaxy Note 7 users in South Korea
to ensure that their devices are safe.
Samsung said it is unloading devices from cargo shipments and
plans to send back stocks already delivered abroad. The company
said it hasn't decided what to do with the turned in devices, but
added that it would follow local regulations in each country.
Samsung shares fell 2% on Thursday in the wake of reports of
problems with the phone during charging but closed up 0.6% on
Friday.
Samsung isn't the first smartphone maker to run into
battery-safety issues. Apple earlier this year recalled adapters
sold in Europe and other regions, citing a dozen cases in which
they had delivered electric shocks.
In 2013, China state media reported that the death of a
23-year-old woman was caused by electrocution when she answered a
call on her iPhone as it was connected to a non-Apple charger.
Apple launched a charger trade-in program.
In 2007, Finnish mobile handset firm Nokia Corp. recalled its
cellphones after receiving reports of around 100 incidents of
batteries overheating from a batch of 46 million.
Rob Taylor in Canberra, Australia, and Eva Dou in Beijing
contributed to this article.
Corrections & Amplifications: Samsung said it found 35 cases
of a battery problem in phones globally. An earlier version of this
article incorrectly stated that it found 35 cases in South Korea.
(Sept. 2, 2016)
(END) Dow Jones Newswires
September 02, 2016 08:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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