Samsung halts Note 7 production after new fire scare: source

Mon Oct 10, 2016 8:01am EDT
 
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By Se Young Lee

SEOUL (Reuters) - Samsung Electronics Co Ltd has suspended production of its flagship Galaxy Note 7 smartphones, a source said on Monday, after reports of fires in replacement devices added to the tech giant's worst ever recall crisis.

Top U.S. and Australian carriers also suspended sales or exchanges of Note 7s, while major airlines reiterated bans on passengers using the phones, after smoke from a replacement device forced the evacuation of a passenger plane in the United States last week.

Fires in phones that were meant to replace devices that had been recalled because of their propensity to explode would be a disaster for the world's largest smartphone maker, suggesting it had failed to fix a problem that has already hurt its brand and threatens to derail a recovery in its mobile business.

"If the Note 7 is allowed to continue it could lead to the single greatest act of brand self-destruction in the history of modern technology," said Eric Schiffer, brand strategy expert and chairman of Reputation Management Consultants.

"Samsung needs to take a giant write-down and cast the Note 7 to the engineering hall of shame next to the Ford Pinto."

In a regulatory filing, Samsung said it was "adjusting" shipments of Note 7s to allow for inspections and stronger quality control due to some devices catching fire.

It did not comment on the production halt or the cause of the fires, while the source - who declined to be identified because they were not authorized to speak to the media - did not explain whether specific problems had been identified or when production was halted.

A Samsung official told Reuters earlier on Monday it was investigating reports of "heat damage issues" and would take immediate action to fix any problems in line with measures approved by the U.S. Consumer Product Safety Commission.   Continued...

 
A couple tries out Samsung Electronics' Galaxy Note 7 at the company's headquarters in Seoul, South Korea, October 10, 2016.   REUTERS/Kim Hong-Ji