Move halts production and sale of defective premium phone; investors digest possibility smartphone giant could abandon Galaxy Note series
By Jonathan Cheng and Eun-Young Jeong in Seoul andEva Dou in Beijing.
SEOUL— Samsung Electronics Co. said on Tuesday that it is discontinuing its embattled Galaxy Note 7 smartphone, pulling the plug on a product whose botched recall has brought headaches to consumers and damaged the Samsung brand.
Samsung said in a filing with South Korean regulators that it would permanently cease production and sales of the device, following a string of reported incidents in which supposedly safe replacements of the smartphone overheated and in some cases caught fire.
“Taking our customer’s safety as our highest priority, we have decided to halt sales and production of the Galaxy Note 7,” the company said.
Investor fears that the worsening crisis could affect South Korean smartphone giant’s reputation with consumers triggered selling that wiped off about $17 billion from Samsung Electronics’ market value.
Samsung shares tumbled 8%, its biggest one-day decline in eight years, far outpacing the broader South Korean market’s 1.2% pullback. The selloff came after Samsung told Galaxy Note 7 users world-wide on Tuesday to immediately switch off their original or replacement Note 7s.
Earlier, the company asked telecom carriers and retailers that sell the Note 7 to stop sales and exchanges of the device pending investigation into the latest incidents. Major U.S. carriers already had made that move on their own.
As the recall went from bad to worse for the world’s largest manufacturer of smartphones by shipments and sales, stock analysts had begun tallying up the likely financial hit for Samsung.