Samsung is permanently discontinuing production and sales of the Galaxy Note 7 smartphone, owing to safety fears over defective batteries — including in replacement handsets the company had subsequently sent to customers following a recall of original devices.
The news was reported earlier by the WSJ, and a spokeswomen for Samsung confirmed it is ending production of the device, telling TechCrunch: “We can confirm the report that Samsung has permanently discontinued the production of Galaxy Note7.”
The company did not provide any additional statement explaining its decision but in a filing about ending production with South Korean regulators it cites ‘customer safety’ as the reason.
Yesterday Samsung had asked carriers and resellers to halt sales and exchanges of Note 7 devices, as reports of problems with replacement handsets mounted. Note 7 owners were offered a full refund or a refund for a different Samsung smartphone, along with a $25 gift certificate or other add-on to sweeten the hassle of dealing with two rounds of recalls.
The initial recall of the circa 2.5 million Note 7s in circulation was announced in early September.
The company had also previously said it was adjusting production of the Note 7 to, in its words, “take further steps to ensure quality and safety matters”.
However, in the event, and given the mounting PR nightmare of even replacement Note 7s having a demonstrable risk of an exploding battery — coupled with the model being namechecked as a safety hazard at airports and on flights all over the world — it’s hardly a surprise Samsung has decided to pull the plug and put the Note 7 out of its misery.
Aside from the damage to Samsung’s Galaxy brand of being associated with exploding batteries, the cost of withdrawing the Note 7 will not come cheap. Reuters cites analysts estimating that a permanent end to Note 7 sales could cost the company up to $17 billion.
Meanwhile, the company’s stock price has also taken a substantial hit on the news of the Note 7’s nixing: falling by 8 per cent today, its biggest percentage decline since October 2008, as investors wiped some $19 billion off the value of the company.
Update: Samsung has now provided the following statement to TechCrunch:
For the benefit of consumers’ safety, we stopped sales and exchanges of the Galaxy Note7 and have consequently decided to stop production.