Samsung: feeling the heat of an explosive recall

News that Samsung is completely scrapping its troubled Galaxy Note 7 smartphone on safety grounds is a “major and embarrassing about-face” for the South Korean electronics giant, said Choe Sang-hun in The New York Times. After further reports of exploding devices, the company made a “final decision” to halt production this week – urging owners of both the Note 7 and replacement devices to “power down” their phones immediately. Millions of customers worldwide have been affected.

For weeks it has been reported that Samsung’s newly launched Note 7 could overheat and catch fire because of a flaw thought to be connected with the battery, said Andrew Griffin in The Independent. The company hoped “to bring an end to the crisis” by offering replacement phones without the supposed defect. But the replacements “also kept blowing up”, and Samsung now admits the cause of the explosions is “a mystery”. That’s spooked investors. Some $19bn was wiped off the company’s value on Tuesday as the stock tumbled 8%. The big worry is that safety fears could spread beyond the flagship smartphone to its other consumer products.

The drastic move to ditch the phone “sent shock waves” through the industry, which had earlier praised Samsung’s handling of the safety issue, said the Financial Times. The company’s top brass is now under “intense pressure” to explain how the recall backfired so badly. “Samsung’s credibility is on the line,” noted analyst Bryan Ma of IDC. Others warned that damage from the fiasco was likely to hit Samsung’s overall reputation, as well as sales – “a boon to rivals such as Apple and Google, just as their new devices hit the market ahead of the crucial holiday sales season”.