Samsung announces total halt in production of Galaxy Note 7

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Samsung is to abandon production of its Galaxy Note 7 smartphones due to consumer safety concerns.

In a statement, the company says it has made a “final decision” to stop making its star product.

It comes in the wake of reports of devices spontaneously catching fire.

Sales likely to be halted

Sources close to the problem say Samsung is also likely to halt sales of the flagship device permanently.

Samsung did not immediately comment on this.

Lawsuits

Samsung also faces lawsuits.

At least two customers are taking the company to court in the US to claim compensation on damages stemming from the faulty smartphone. In its September 15th recall, the US regulator said the firm has received: 92 reports of batteries overheating 26 reports of burns 55 reports of property damage

The Timeline

August 2
Samsung unveils Galaxy Note 7 in New York

August 24
First report of explosion in South Korea

August 31
Samsung delays shipments

September 2
Announces global recall of 2.5 million phones citing faulty batteries

September 8
US FAA issues warning about use on planes

September 9
US consumers told to stop using phones

October 6
Passengers evacuated from US flight due to smoke from Note 7

October 10
Samsung says it is “adjusting shipments” of the Note 7 for inspections and quality control due to more reports of fire

October 11
Samsung asks customers to stop using all Note 7 smartphones and halts sales and exchanges of the device globally as it investigates fire claims.

The business

Analysts predict Samsung’s lost sales from the Note 7 could top 15 billion euros. The firm was expected to generate this profit during the device’s product cycle.

Samsung, the world’s top-selling smartphone company, is waiting for the results of an inquiry by the US safety regulators.

Some investors and analysts say scrapping the Note 7 and focusing on more successful models could limit the financial and reputational damage.

Samsung has a market value of 235 billion US dollars, as well as 69 billion US dollars in cash and equivalents. Analysts say the loss of one model could be absorbed. The feeling is the bigger problem could be the long-term impact on the company’s reputation and brand.

What they are saying

“The Note 7 is forever going to be tarnished and the danger is that the brand becomes irretrievably damaged as well,” – Stephen Webb, partner at UK law firm Weightmans.

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