AP
SEOUL, South Korea (AP) — Samsung says it is stopping production of its Galaxy Note 7 smartphones, a day after it halted global sales of the star-crossed devices.
The South Korean company said in a regulatory filing Tuesday that it has made a final decision to stop production for the sake of consumer safety.
Samsung is struggling to regain consumer trust after a first round of recalls. The company told customers around the world on September 2 that it was starting a global recall as a precaution after several phones caught fire after charging.
The company shipped out new, safe phones that it said were not affected by the battery issue. If the saga had ended there then it would have been a minor issue for Samsung and the Galaxy Note 7 could have lived on.
But Samsung stopped selling the device after it found that even the supposedly safer replacements it was providing for recalled Note 7 phones were catching fire. Now Samsung has to go through a second round of recalls to take back the supposedly safe phones. Clearly the Note 7 brand has been damaged by this, and analysts began to suggest on Monday that Samsung should cut its losses and move on.
South Korean media reported Monday that Samsung’s factories stopped making the fire-prone phones but Samsung insisted it was making production adjustments to improve inspections and quality control. Now it says it has officially killed off the Note 7.
This is the worst possible outcome for Samsung, but it’s really the only decision it had left. If it kept the Note 7 on sale then it faced an increasing number of carriers refusing to sell it, and may even have seen it banned in the US. “In the worst case scenario, the U.S. could conclude the product is fundamentally flawed and ban sales of the device,” said Song Myung-sub, an analyst at HI Investment Securities.
Analysts have estimated that the total cost to Samsung of the Galaxy Note 7 sage could be $17 billion. That’s the total amount that the company was expected to bring in from the sales cycle of the phone. That figure doesn’t include the damage to the Samsung brand, though.
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