Samsung Note 7 recall in US expands to replacement phones

The world’s largest phone maker “stopped sales and exchanges of the Galaxy Note 7” and “consequently chose to stop production” of the device, citing consumer safety concerns, pulling the plug on the device completely due to incidents of fire erupting in models handed out to replace recalled devices.

Consumers who have a Note 7 in their possession must visit stores where they bought the devices to get a refund or exchange.

Samsung’s smartphone shipment to India may fall short of target by 4 million units in 2016, hit by global recall and halt in production of its flagship Note 7 smartphone, research firm CMR today said.

The move sent Samsung’s share price into a steep dive and forced it to slash its third-quarter profit estimate by a third.

The earlier recall on September 2 of the fire-prone smartphones is estimated to have caused a loss of about 1 trillion won.

Samsung has enough cash and other businesses to absorb the shock from the phone recall.

On Wednesday, it said it expected the move to knock about $2.3 billion off its operating profit for the three months to September 30.

“Samsung reflected most of the costs from the Note 7 in the Q3 earnings, reducing uncertainty about Q4 profit”, analyst Jay Yoo at Korea Investment & Securities said.

In its statement, Samsung vowed to “focus on enhancing product safety for consumers by making significant changes in its quality assurance processes”. It did not elaborate.

Those who exchange for other brands, or take a refund, continue to receive a $25 credit.

With Samsung accounting for about 17 percent of South Korea’s GDP, such a major business reversal is likely to have a national impact, Bank of Korea (BOK) Governor Lee Ju-yeol said.

Samsung Electronics Taiwan offers Note 7 owners a full refund or the option to exchange their smartphones for another Samsung device, the Galaxy S7 edge or Note 5. Samsung is expecting 1.5 million returned phones from the U.S and South Korea. And critics complained that some retailers didn’t have up-to-date information until Samsung made a coordinated announcement with the U.S. Consumer Product Safety Commission. The company received 13 reports of burns and 47 reports of property damages associated with the phones.

Samsung began shipping new Note7 phones that were believed to be safer, but following reports that some of those replacement phones were catching fire, the South Korean company on Monday stopped selling the devices, and on Tuesday announced it would permanently stop production on them.

The damage done by the Samsung Note 7 was reported to have cost Samsung a huge sum, amounting to $17 billion.

The Note 7 saga is nowhere near over, and with Samsung still having no idea as to what was actually causing the explosions, it will drag out for quite some time. It was sold for between $850 and $890.