Samsung has officially advised consumers to stop using its Galaxy Note 7 and “immediately participate” in a replacement programme, following further reports of phones catching fire. With an estimated 2.5 million Galaxy Note 7 units sold, analysts say the recall could cost Samsung as much as $5 billion in revenue. The smartphone was launched on 19 August.
The company has lost $22 billion in market capitalisation as its share price has tanked 11 per cent since Friday – the largest two-day decline in eight years, according to Bloomberg.
The call came after the US Consumer Product Safety Commission recommended on Friday that consumers stop using the smartphone and major airlines globally banned use during flights.
Samsung issued a recall for Galaxy Note 7 smartphone in early September in 10 markets, including the US and South Korea.
Defective batteries, which caught fire during charging and normal use, were apparently manufactured by Samsung SDI. Batteries made by its other supplier, Amperex Technology, have not faced the same issues.
Samsung said it is now only using batteries made by Amperex for the Galaxy Note 7 and has ordered an additional four million as replacements, Yonhap reported. The Chinese firm, which also supplies batteries for Apple’s iPhones, is now the sole battery suppler for the Note 7.
Samsung’s battery unit previously supplied about 70 per cent of the batteries for Note 7. The world’s largest smartphone maker reportedly was looking for a third battery supplier but hasn’t found one. As demand for the iPhone 7 models takes off, Samsung could face a supply crunch.
Samsung issued a statement for the Hong Kong and Macau markets, outlining that “we wish to re-emphasise that Galaxy Note 7s purchased in Hong Kong and Macau from authorised resellers on or after 2 September are not affected by the issue as those batteries are provided by a different supplier”.
It previously said that fewer than 500 Galaxy Note 7s sold in Hong Kong and Macau between 26 August and 1 September “may be affected by the battery issue”. It said a replacement programme is running and it “has been proactively contacting customers who may be affected”
