Report: Samsung suspending Note 7 production after mishaps

Samsung has temporarily halted production of the top-selling Galaxy Note 7 after multiple replacement devices caught fire, Yonhap News Agency reported late Sunday.

Yonhap cited an unnamed official at a supplier for Samsung.

Samsung was not immediately available for comment.

The South Korean electronics giant was forced to recall 2.5 million of the original Note 7 phablet-sized phones last month, when lithium-ion batteries in some of those devices caught fire. At least three of the Note 7 replacement units have since overheated, according to multiple reports.

Temporary suspension of production of the Note 7 and Note 7 Plus could have devastating consequences for Samsung, the world’s biggest seller of smartphones.

"Battery-gate” has badly burned Samsung’s reputation and could undercut its competitive standing in a crowded smartphone market recently joined by Google, with its new Pixel phone, and Apple, with its iPhone 7. The spate of smoking, popping replacement Note 7s could also jeopardize the future of the Note 7 itself.

Earlier Sunday, Samsung said it was investigating a Note 7 that was reported to have caught fire in Kentucky, a third incident in less than a week involving its replacement phones.

Michael Klering of Nicholasville, Ky., told WKYT that he woke up to a hissing sound in his bedroom Tuesday and found his replacement Note 7 on fire. He said he had owned the phone a little more than a week before it caught fire.

“The phone is supposed to be the replacement, so you would have thought it would be safe. It wasn’t plugged in,” Klering told the station. Klering said he went to a local emergency room due to vomiting and was diagnosed with acute bronchitis. He is now seeking a lawyer.

In a statement, Samsung said Sunday, "We want to reassure our customers that we take every report seriously, and we are engaged with Mr. Klering to ensure we are doing everything we can for him."

The latest incident could heighten pressure on U.S. regulators to recall replacement Note 7s, which were thought to be safe after Samsung recalled 2.5 million of the original Note 7s last month when lithium-ion batteries in some of those devices caught fire.

On Friday, Abby Zuis, 13, of Farmington, Minn., told local TV station KSTP that her replacement Galaxy Note 7 produced smoke and was burnt, with the protective cover melting.

AT&T confirmed Sunday that it is no longer exchanging new Note 7s for the initially recalled phones, pending further investigation.

Sprint said Sunday customers who are worried about their replacement Note 7s can exchange them for any other device during the CPSC investigation.

T-Mobile said its customers can also bring their Note 7s for a full refund or exchange them for other devices in its inventory.

The U.S. Consumer Product Safety Commission continues to conduct an active “priority” investigation into why a replacement Note 7 that was deemed safe caught fire Wednesday morning on a Southwest flight from Louisville to Baltimore.

“The short-term effect to the first recall seemed small,” says Matthew Quint of Columbia Business School. “A recall of replacement units? That’s two strikes. It gets dicey for Samsung.”

Samsung, which is cooperating with the investigation, late Friday said it is investigating the case to determine the cause and "will share findings as soon as possible."

"We remain in close contact with the CPSC throughout this process," the company said. "If we conclude a safety issue exists, we will work with the CPSC to take immediate steps to address the situation."

The long-term financial hit for Samsung remains to be seen. For now, it appears modest.

In a preview of the full quarterly earnings that it reports later in the month, Samsung on Friday said its operating profit would reach 7.8 trillion won, about $7 billion, compared to 7.4 trillion won in the same period last year. Sales though are falling to 49 trillion won, or $44 billion, down 5% from a year earlier.

USA TODAY


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