Samsung recalling Galaxy Note 7 worldwide over devices catching fire

Customers who have already bought phones will be able to swap them in two weeks, according to the company

Tech giant Samsung Electronics Co Ltd is recalling millions of new Galaxy Note 7 smartphones worldwide after reports of the devices catching fire while charging, South Korea's Yonhap News Agency reported, citing a company senior official.

Samsung's Note 7s are being pulled from shelves in 10 countries, including South Korea and the United States, just two weeks after the product's launch.

Customers who already bought Note 7s will be able to swap them for new smartphones in about two weeks, Koh Dong-jin, president of Samsung's mobile business, told reporters at a news conference

Samsung said it had confirmed 35 instances of Note 7s catching fire or exploding.

There have been no reports of injuries related to the problem.

Dong-jin, head of the South Korean company's smartphone business, declined to comment on how many phones needed to be  replaced, but said Samsung had sold 2.5 million of the premium devices so far.

It estimated that about 24 out of one million units may have a faulty battery.

"There was a tiny problem in the manufacturing process, so it was very difficult to figure out," Koh said. The reason we made this decision is because what is most important is customer safety."

Models in China feature a different battery and are not being recalled by Samsung, the world's biggest smartphone vendor.

The recall comes just over two weeks after the company launched its latest premium phone, which features an outsized screen and high-resolution camera.

It follows reports of the 988,900 won ($885) phone igniting while charging.

The manufacturer plans to replace not only phones with faulty batteries sold to consumers, but also retailer inventories and units in transit.

Strategy Analytics said the combined cost of the recall and lost sales would lop $5 billion off Samsung's smartphone revenue this year and cut smartphone profit margin by 1.5 per cent.

The scale of the recall is unprecedented for Samsung, which prides itself on its manufacturing prowess.

While recalls in the smartphone industry do happen, including for rival Apple Inc , the nature of the problem for the Galaxy Note 7 is a serious blow to Samsung's reputation, analysts said.

The company should act quickly to minimise damage to its smartphone recovery, after a string of product successes had reversed a fall in market share, they added.

CUSTOMERS PUT ON HOLD

The phone first launched in 10 markets in North America, Asia and the Middle East.

Further roll-outs have occurred since in markets like China, where sales started just this week. Its wider availability, set for coming weeks, is now on hold.

While there are occasional reports of phones catching fire or otherwise burning users, documented cases that lead to widespread product recalls remain relatively rare.
Samsung said it was aware of 35 reports of affected Note 7 batteries.

In 2007, the largest battery recall in consumer electronics history took place when Nokia, then the world's top mobile handset maker, offered to replace 46 million phone batteries produced for it by Japanese maker Matsushita Battery.

Germany's biggest operator, Deutsche Telekom, said it had stopped delivering orders for the Galaxy Note 7, while French operator Orange said on its website that it had stopped pre-sales of the phone and postponed its planned sales launch - scheduled for Friday.

In Britain, mobile carriers EE and Vodafone continue to accept pre-orders for the Note 7 on their sites. A Vodafone spokesman said its planned Sept. 19 sales launch could now slip, but the company was waiting for more details from Samsung to decide.

Strategy Analytics said Samsung will likely sell fewer than 10 million Note 7s this year compared with its previous estimate of 14 million globally.

Samsung said new sales of the Note 7 in affected markets would resume after it deals with replacements, a process it expects will begin in about two weeks.

The firm would extend refund periods for affected customers and offer exchanges for other Samsung phones, Koh said.

Samsung's mobile division accounted for about 54 percent of the firm's January-June operating profit of 14.8 trillion won.

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