213 views

Discontinued: Samsung's completely ditching disastrous Galaxy Note 7 production

Lynsey Barber
Follow Lynsey
Samsung Unveils Its New Galaxy Note 7
The Galaxy Note 7 was recalled (Source: Getty)

Samsung will completely ditch the disastrous Galaxy Note 7 after a catalogue of errors since the device was recalled due to a number of reported explosions.

Production of the device will come to a permanent end the, company said in an update to markets on Tuesday.

Samsung was forced to announce a temporary halt to production just yesterday, after reports that even replacement devices had issues.

Read more: Revealed: The nocturnal habits of 15m smartphone users

One of Samsung's flagship devices, the Galaxy Note 7 was unveiled in August, but by September the firm was forced to order an unprecedented recall and replacement after several incidents of the battery exploding - and even the replacements were found to have faults.

The cost of recalling the devices was already running into the billions of dollars, analysts estimate, but calling time on the Note 7 is likely to cost even more.

Analysts at Credit Suisse predict the total cost could run as high as $17bn (£14bn) due to lost sales as a result of completely halting production.

However, Samsung is also likely to take a further hit from the impact on its reputation.

Read more: Here's everything you need to know about the Galaxy Note 7

"The real loser here is Samsung which may suffer long lasting damage to its brand across all of its products as well as a loss of share," said Edison Investment Research analyst Richard Windsor.

"Samsung’s superb profitability in Android handsets is based on the fact that it out-ships its nearest competitor by more than two to one, and a big loss of brand equity will give Huawei an opportunity to close the gap."

In the dog-eat-dog world of smartphone brands, the hit to Samsung has already pushed shares in rival Apple to all-time highs for 2016.

Shares in Samsung slid further, down eight per cent, on news of the device being pulled forever.

Related articles