Galaxy Note 7 recall could cost Samsung a ‘heartbreaking’ $1 billion

Samsung Galaxy Note 7
Julian Chokkattu/Digital Trends
Samsung is currently dealing with a global recall of its flagship Galaxy Note 7 phablet following reports of some devices’ batteries suddenly catching fire.

It’s a big embarrassment for the company, not to mention a monumental headache, and comes just a couple of weeks after the well-received top-of-the-range phone landed in stores.

Following Friday’s announcement, the question on the lips of many observers was how much Samsung’s unprecedented recall and replacement exercise would cost the company. Koh Dong-jin, Samsung’s president of mobile communications business, would only describe it as “a big amount” that was “heartbreaking.” However, Bloomberg has just done some number crunching and on Monday and put the figure at “as much as $1 billion.”

Of course, a massive company like Samsung can take a hit like that, but the cost, both financial and to its reputation, is one it could well do without.

The Korean tech giant said it’d so far sold 2.5 million Note 7 devices – far exceeding the company’s early forecasts for the handset – though reports of the battery suddenly combusting came from only 35 owners. However, for Samsung that’s 35 too many.

“Samsung is committed to producing the highest quality products and we take every incident report from our valued customers very seriously,” the company said in a statement on Friday.

It added that it’s now carrying out “a thorough inspection with our suppliers to identify possible affected batteries in the market.”

Samsung SDI has supplied 70 percent of the batteries for the Note 7, the Korea Economic Daily said, while Hong Kong-based battery manufacturer Amperex Technology supplied 30 percent. Reports out of South Korea this week said Samsung has decided for now to stop using batteries from Samsung SDI, while at the same time increase orders from Amperex, action that suggests its own affiliate’s batteries are at fault.

The recall is clearly damaging for the Korean tech firm, though its fast response and offer to replace handsets is at least a positive move that should help to alleviate any ill feeling among consumers affected by the unfolding situation.

Editors' Recommendations