Samsung Electronics Co.’s recall of one of its most advanced smartphones descended further into confusion, as the technology giant told consumers to stop using the Galaxy Note 7 and halted its production and distribution, while investigators probed reports of overheating batteries on devices that were supposed to be safe.
The company said it was asking all telecom carriers and retailers that sell the Note 7 globally to stop sales and exchanges of the device pending investigation into the latest incidents. Consumers with either an original or a replacement Note 7 should power down and stop using the device, said Samsung.
The world’s top smartphone maker earlier said it had asked all global carriers to stop sales of the Note 7s and the exchange of original devices for replacements, while it worked with regulators to investigate the problem. The company is offering to exchange Note 7s for other products or refund them.
“Consumers with either an original Galaxy Note 7 or replacement Galaxy Note 7 device should power down and stop using the device,” the company said in statement. Samsung’s decision to pull Note 7s off the shelves for the second time in less than two months not only raises fresh doubts about the firm’s quality control but could result in huge financial and reputational costs.
Analysts say a permanent end to Note 7 sales could cost Samsung up to $17 billion and tarnish its other phone products in the minds of consumers and carriers. Investors wiped $18.8 billion off Samsung Electronics’ market value on Tuesday as its shares closed down 8 percent, their biggest daily percentage decline since 2008.
The premium device launched in August was supposed to compete with Apple Inc’s latest iPhone for supremacy in the smartphone market. Well received by critics, its first problem was a shortage as pre-orders overwhelmed supply. But within days of the launch images of charred Note 7s began appearing on social media, in the first sign that something was seriously amiss with the gadget. Samsung has since recalled 2.5 million Note 7s due to faulty batteries.