Users of Samsung Electronics Co’s troubled Note 7 smartphones in the US and South Korea were urged to immediately turn off and stop charging them, while aviation authorities around the world called on passengers not to use the devices during flights.
The warnings were issued by the US Consumer Product Safety Commission and Samsung, which are also in talks on an official recall of the devices as soon as possible. About three dozen of the phones, released just three weeks ago, had batteries that caught fire or exploded.
“This consumer warning is based on recent reports involving lithium-ion batteries in certain Note 7 devices that have resulted in fires,” the CPSC said in a statement. “These incidents have occurred while charging and during normal use, which has led us to call for consumers to power down their Note 7s.”
The troubles come at a critical time for Samsung. The company rolled out the Note 7 last month to give it a head start on Apple Inc’s new iPhone, which was unveiled this week. But that advantage has now disappeared. Samsung shares fell 3.9% in trading Friday in Korea, the biggest drop since January 4.
The recent introduction of new products by the two leaders of the global smartphone market are critical to their competition, Bloomberg Intelligence analyst John Butler said in an interview.
“Samsung’s troubles, and they’re meaningful at this point, are a positive development for Apple and its competitive position vis-a-vis Samsung,” Butler said. “We’re rolling quickly into the holiday quarter, so Samsung has to move quickly to recall the Note 7 devices with faulty batteries and get replacement units to people who already bought this model.”
The Suwon, South Korea-based company has already announced a voluntary, worldwide recall of all 2.5mn of the smartphones it has already shipped, at a cost to the company estimated at as much as $1bn. Yesterday, Samsung told users in South Korea to stop using the devices and to bring them to the company’s service centres. Customers can rent replacement phones until Note 7’s with new batteries become available on September 19, the it said. It wasn’t clear whether the fixed Note 7 models would also be offered elsewhere on that date.
Almost all CPSC recalls are done voluntarily in conjunction with a company and the scope of any action on the Note 7 may be identical to what Samsung has already suggested to consumers.
But once the agency becomes involved, it triggers additional protections for people. For example, US law prohibits the sale or resale of any recalled item once CPSC acts.
The CPSC action came as aviation regulators in several countries and airlines advised passengers against turning on or charging the devices during flights.
The European Aviation Safety Agency on Friday issued such a warning and cautioned against packing them in checked bags, according to a posting on its website. That followed a non-binding warning issued on Thursday by the US Federal Aviation Administration.