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Samsung Galaxy Note 7 disaster deepens with reviews of manufacturing halt

Samsung

The decision reported by using South Korean information organization Yonhap follows repeated troubles with the new device
A Samsung Note 7 handset is pictured next to its charred battery after catching hearth during a check at the Applied Energy Hub battery laboratory in Singapore. The business enterprise has now suspended production of the cellphone.

Samsung’s smartphone doesn’t forget disaster has deepened after South Korean media said the tech massive had suspended manufacturing of its Galaxy Note 7 version amid reviews that replacement gadgets had stuck hearth.

 

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Citing an unnamed source at a Samsung provider, the information organization Yonhap said the business enterprise on Monday decided to halt manufacturing of the phone, one of the maximum superior and high priced merchandise of its kind in the marketplace.

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The extraordinary halt in manufacturing is some other blow to Samsung, which ultimate month announced the worldwide recall of at the least 2.5m Galaxy Note 7 smartphones because of defective batteries that induced some of the phones to emit smoke or capture fireplace.

 

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Social media pix of pics of charred Note 7 telephones have handiest brought to the humiliation felt by way of Samsung, an iconic South Korean firm that has built a recognition for innovation and nice because getting into the customer electronics marketplace in the late Nineteen Sixties.

Two US cell companies have said they may prevent issuing new Galaxy Note 7 smartphones after current reviews of substitute gadgets emitting smoke or bursting into flames.

In one incident, passengers had been evacuated from a Southwest Airlines flight in Kentucky earlier this week after a replacement Note 7 commenced smoldering and making “popping noises” quickly after its proprietor boarded the aircraft.

AT&T stated forty-three it’d prevent replacing new Note 7 smartphones because of reports of fires from alternative devices that Samsung stated contained secure batteries.

T-Mobile stated it become briefly halting income and exchanges of new Note 7s. South Korea’s biggest mobile service, SK Telecom, said it became monitoring the situation, even as KT Corp, us of a’s No.2 provider, said it had taken no action on new Note 7 income or exchanges.

“This degree consists of a Samsung plant in Vietnam that is liable for worldwide shipments (of the Galaxy Note 7),” Yonhap quoted the supply as pronouncing.

Samsung has but to comment on the Yonhap record.

The modern day trouble with the Note 7 will frustrate Samsung’s attempts to restore its battered recognition and result in harsh financial penalties, with some analysts predicting that the worst recall crisis in the company’s history may want to cost it US$5bn in revenues.

“I concept the Note 7 rely on become coming to an give up, but it’s turning into an difficulty once more,” stated CJ Heo, a fund manager at Alpha Asset Management. Heo said he predicted Samsung to get over brief-time period damage to its reputation, however, introduced that the keep in mind disaster might hit the fourth-region income of the Note 7.

Despite the keep in mind, Samsung said last week that its 0.33-area earnings rose 6 percent to about $7bn on overall income of $forty three.9bn, way to income from Samsung’s different products.

The company offered 76m smartphones in the 2nd quarter of 2016, most of them decrease-priced fashions.
Samsung has issued its second profit warning this week after the withdrawal of its Galaxy Note 7 phone, increasing the estimated cost of the recall to its bottom line from £1.9bn to at least £4bn.

The South Korean electronics company said the crisis caused by the exploding Note 7 smartphones would reduce profits by at least 3tn won (£2.2bn) in the six months to the end of March. It hopes it can boost sales of its other flagship handsets to cushion the impact.

The new profit warning comes just two days after the company slashed its operating profit estimate for the third quarter by £1.9bn. It takes total losses caused by the Note 7 fiasco to £4.1bn.

 

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Analysts predict the Note 7 crisis could cost Samsung a lot more given the damage to its brand, with estimates ranging from $10bn to $20bn.

Greg Roh, an analyst at HMC Investment Securities, said Samsung’s latest estimate “doesn’t take into account the huge marketing costs for Samsung to win back customer loyalty and to regain the trust of mobile carriers. It will have to spend a lot of money to recover, and much work has to be done.”

The world’s largest smartphone maker was forced to recall 2.5m Note 7 devices in early September after users around the world reported flames and explosions caused by overheating batteries.

It initially insisted the replacement phones were safe, but after reports that they were catching fire as well, Samsung announced on Tuesday that it would scrap the model entirely.

Samsung said: “Moving forward, Samsung Electronics plans to normalize its mobile business by expanding sales of flagship models such as the Galaxy S7 and Galaxy S7 edge.” It also vowed to “focus on enhancing product safety for consumers by making significant changes in its quality assurance processes.”

The company blamed faulty batteries made by an unnamed supplier, widely believed to be its sister company Samsung SDI. But experts believe the problem was caused by the handset’s underlying technology, and Samsung’s decision to rush it out before the latest iPhone launch.

The US recall and replacement program for the Note 7 have begun after an agreement was reached with the Consumer Product Safety Commission (CPSC), increasing the number of devices that could be returned to 1.9m.

Samsung claims only 96 handsets have been found to have caused damage or injury owing to the faulty battery problem. Of those, 13 have caused injuries and burns to people, and 47 have damaged property. There have also been accounts of the smartphones smoldering and smoking during flights, including one in India and one in the US.

All US Note 7 owners can exchange their devices for another Samsung smartphone or receive a refund under the plan approved by the CPSC, the company and agency said on Thursday. Customers who exchange the Note 7 for a Samsung device will receive a $100 credit; those opting for an alternative brand will receive $25 credit.

The Note 7 was due to relaunch in the UK, costing £740 ($907), at the end of October. Many customers have already bought them through a pre-order campaign. Samsung said 45,000 Note 7s had been sold in Europe, the majority in the UK.