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Category: Consumer Protection / Consumer Electronics / Electronics / Mobile Phones

Samsung confirms Galaxy Note 7 production changed 'to ensure safety'

Monday, 10 Oct 2016 12:21:23

Samsung shares were down 3.3 per cent as of 11:25am AEST. (Supplied: Samsung)

Samsung Electronics has confirmed it has made changes to its Galaxy Note 7 smartphone production, following reports its replacements for the fire-prone phones were overheating.

Key points:

  • Samsung "temporarily" adjusting Note 7 production schedule, company says
  • Production halted in cooperation with China, US authorities, media says
  • Announcement follows reports of fires from replacement devices Samsung said used safe batteries

In a statement, the tech giant said it was "temporarily" adjusting the production schedule to "ensure quality and safety matters".

In a separate regulatory filing, Samsung said it was adjusting the Note 7's production volumes. It said it would issue an update when more details were available.

But Samsung fell short of confirming or denying earlier media reports it had halted production following claims of fires in replacement devices.

An unnamed Samsung partner firm source had told Yonhap News Agency Samsung's decision to temporarily halt Note 7 production was done in cooperation with authorities in China and the United States, as two US carriers have stopped exchanging or selling new Note 7 phones.

Problems with replacements for the Note 7 model would create a new and potentially costly chapter to a global scandal which has hurt the reputation of the world's biggest smartphone maker.

It also could add new dangers for consumers.

Samsung had promised that its new Note 7 with a green battery icon was safe.

But the reports of replacement phones catching fire raised doubts about whether the battery was the only problem in the smartphone, as Samsung had initially said.

Samsung had blamed the batteries supplied by one of its two battery suppliers and assured consumers other parts of the smartphones were fine.

The US's number two wireless carrier AT&T Inc said it would stop exchanging new Note 7 smartphones due to reports of fires from replacement devices that Samsung has said used safe batteries.

T-Mobile US Inc, the country's third most popular wireless carrier, said it was temporarily halting sales of new Note 7s as well as exchanges while Samsung investigated "multiple reports of issues" with its flagship device.

T-Mobile offered customers who brought in their Note 7s a $US25 ($33) credit on their phone bill.

In September, Samsung announced a global recall of 2.5 million Note 7s in 10 markets, including the United States, due to faulty batteries causing some of the phones to catch fire.

A Southwest Airline flight was evacuated earlier this week after a replacement model Note 7 smartphone began smoking inside the plane, according to the family who owns the phone.

Earlier, Samsung said it was investigating reports of "heat damage issues" and would share its findings when the investigation is complete.

"If we determine a product safety issue exists, Samsung will take immediate steps approved by the CPSC (US Consumer Product Safety Commission) to resolve the situation," Samsung said in a statement.

Samsung shares drop

Samsung shares were down 3.3 per cent as of 11:25am AEST, compared with a 0.1 per cent fall for the broader market.

"I thought the Note 7 matter was coming to an end, but it's becoming an issue again," Alpha Asset Management fund manager CJ Heo said.

Samsung should be able to recover from the short-term reputational damage of the recalls, but fourth-quarter sales of the Note 7 would be hurt, Mr Heo said

South Korea's largest mobile carrier SK Telecom said it was closely monitoring the situation and would not comment further.

KT Corp, South Korea's number two carrier, said it had taken no steps in regards to sales or exchange of new Note 7s.

Reuters

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