Industry analysts recommend Samsung to abandon Galaxy Note 7 completely to save face

Samsung halts Note7 production after new reports of fires

Image credit: Reuters

Samsung Electronics has suspended production of its flagship Galaxy Note7 smartphones following reports that even devices replaced following a product recall have been catching fire.

The information was revealed by Reuters’, citing an unnamed source. PA said Samsung confirmed making ‘changes to its output’ on Monday in order to manage the self-igniting battery fiasco. In a statement, the South Korean electronics giant said it was ‘temporarily’ adjusting production of the troubled gadget to ‘ensure quality and safety’. However, the firm didn’t confirm Reuters’ information about suspending production completely.

The news comes after a story broke last week of an American man whose replacement Galaxy Note 7 had caught fire on a flight from Kentucky to Baltimore.

Multiple vendors including US AT&T and T-Mobile said earlier that they will no longer offer new Note7 phones as replacements to their customers.

Having originally recalled 2.5 million Note7s on 2 September this year, Samsung said it was the gadget’s battery that was responsible for the fire hazard. However, the fact that even replacement devices with new safer batteries have been reported catching fire suggests there might be a deeper problem within the device’s systems.

Analysts say Samsung’s inability to fix the problem could cause excessive damage to the brand and affect consumers’ trust.

“If the Note7 is allowed to continue it could lead to the single greatest act of brand self-destruction in the history of modern technology,” Eric Schiffer, brand strategy expert and chairman of Reputation Management Consultants, told Reuters.

“Samsung needs to take a giant write-down and cast the Note7 to the engineering hall of shame next to the Ford Pinto,” he added. The Pinto gained notoriety in the 1970s for serious problems with its fuel system.

HDC Asset Management fund manager Park Jung-hoon, whose fund owns Samsung shares, agreed. “I think the cleanest thing to do is to give up on the Note7,” he said.

“What’s scary is that this is causing people to repeatedly doubt Samsung’s fundamental capabilities, so it’s important for Samsung to get past this issue quickly.”

Samsung’s recall crisis has coincided with pressure from one of the world’s most aggressive hedge funds, Elliott Management, to split the company and pay out $27bn in a special dividend.

Passengers on international airlines are currently being banned from using Note7s aboard planes.

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