Samsung Halts Production of Note 7 Amidst Fire Scare
On Monday, a source revealed that Samsung Electronics Co. has halted the production of its Galaxy Note 7 smartphones after the tech giant’s worst ever recall crisis went even further when reports about fire in replacement devices began to surface. Sales and exchanges of the flagship device were suspended by the top U.S. and Australian carriers while the ban placed by major airlines on passengers using the phones was reiterated last week after smoke emitting from a replacement device forced a passenger plane in the United States to evacuate everyone. If the phones, which were meant to replace the devices that had been recalled worldwide due to their propensity to explode, also start catching fire, it would be a massive disaster for the world’s largest smartphone maker.
This is because it would suggest that the company has failed to fix a problem that has already damaged its brand considerably and will also derail the firm’s attempts to make a recovery in its mobile business unit. Some experts were of the opinion that if the South Korean firm allowed the Note 7 to continue, it could end up as the single greatest act of self-destruction for a brand in the whole history of modern technology. They said that it was time for Samsung to consider a great write-down and just move the Note 7 to the engineering hall of shame once and for all.
Samsung said in a regulatory filing that it was making adjustments to shipments of the device for make room for stronger quality control and inspection as some devices had caught fire. The company didn’t say anything about the cause of the fires or the halt of production. Likewise, the source, who wished to remain anonymous as they are permitted to speak to the media, didn’t explain if Samsung had highlighted the specific problem or when they had stopped the production.
Earlier on Monday, a Samsung official had said that they were looking into reports of ‘heat damaging issues’ and would take action immediately for fixing any problems that were not in agreement with the measures approved by the U.S. Consumer Product Safety Commission. Samsung had announced a global recall of 2.5 million units of its Galaxy Note 7 smartphones on September 2nd because of faulty batteries that had caused some of the phones to catch fire. The company had consulted another supplier for new batteries and had begun sending replacements for customers within two weeks.
However, on October 5th, similar issues began to arise with the replacement phones as well. This is one of the reasons why most analysts recommend that the South Korean manufacturer should consider giving up on the device altogether. The company’s fundamental capabilities are being repeatedly doubted because of this issue and it is better to shut it down altogether to prevent further damage to the brand. The recall woes coincide with pressure being placed by one of the world’s most aggressive hedge funds, Elliot Management, to pay out a special dividend of $27 billion and split the company.