The major U.S. carriers of the Note 7 — Verizon, T-Mobile, AT&T and Sprint — announced their own suspension of sales or exchanges for Samsung’s troubled flagship smartphone, which was recalled on September 2 after reports of fires associated with “a battery cell issue.”
The company initially said it had solved the problem, after allowing consumers to trade in their phones for replacement devices. However, production of the replacements was halted after telecommunications companies in the U.S. and Australia said they would no longer offer the Note 7 following reports of fires involving replacement phones in which the issue was supposed to be fixed.
The recurring dilemma has led some industry experts to speculate that the problem goes beyond sloppy production and is instead being caused by a defective battery or software design.
Last week, a Southwest Airlines flight was evacuated at Louisville International Airport after a man’s replacement Note 7 began smoking at the gate while he was powering it down. The owner and his family told news media that the phone was a replacement model. Customers in China and South Korea have reported similar incidents.
In a disclosure to the South Korean stock exchange on Monday, Samsung said it was “temporarily adjusting the Galaxy Note 7 production schedule in order to take further steps to ensure quality and safety matters,” and that it hopes to provide an update on the matter within a month.
The crisis threatens to severely undermine the brand name and credibility of Samsung, South Korea’s largest and most profitable company. Since the initial Note 7 recall, the company has suffered a nearly 40% drop in operating profit for its IT and mobile device division. Things are likely to get worse before they get better, as halted sales by major carriers is estimated to cost Samsung $630 million in lost revenue during the fourth quarter alone.
Source: New York Times.