Samsung’s global recall for the Galaxy Note 7 could cost the company up to $1 billion (about RM4 billion), as its exchange program begins in certain markets this week.
Due to a battery-related issue that affects 0.0024% of all Galaxy Note 7 devices manufactured so far, Samsung has decided to recall all of the flagship smartphones sold since it was available on 19 August.
The South Korean conglomerate’s own estimates show that it has sold about 2.5 million devices before sales were halted in all markets. At the company’s press announcement, mobile chief DJ Koh described the cost of replacing all devices was so big that “it almost breaks my heart“.
“…it almost breaks my heart”
While Samsung remains tight-lipped about the total costs involved for the exchange program, estimates from three firms – Credit Suisse Group AG, Daishin Securities Co. and Pelham Smithers Associates – peg the amount to $1 billion or less.
The Galaxy Note 7’s battery is sourced from two suppliers, of which a Samsung subsidiary, Samsung SDI, supplied 70% of the battery cells for the device. The remaining 30% is supplied by a company called Amperex Technology Ltd. from China. Samsung declined to disclose where the faulty batteries were sourced from.
For the Malaysian market, local arm Samsung Malaysia Electronics released a media statement on Friday evening to confirm that all Galaxy Note 7 owners are eligible for the voluntary exchange program. Our own conversation with Samsung’s Premium Care hotline, as well as with Samsung Malaysia PR representatives, confirm that all 8,000 pre-order units of the Galaxy Note 7 are to be replaced within the next two weeks.
(Source: Bloomberg)
