SEOUL â Samsung Electronics temporarily suspended production of its Galaxy Note 7 devices following reports of fires in its replacement models, a person familiar with the decision said on Monday.
The decision amounts to a major setback for Samsung, the worldâs biggest smartphone maker, which continues to struggle with the industryâs largest-ever recall. Already Samsung had said it would recall 2.5 million Note 7 phones over reports that its battery can catch fire. The halt suggests the South Korean company has not yet gotten the problem under control.
The decision came after major mobile carriers in the United States said they would stop issuing Note 7 devices over safety concerns. They too were responding to reports that some new phones were catching fire.
Samsung made the decision to halt production for consumer safety reasons and in cooperation with the authorities in the United States and China, the person said. The news agency Yonhap and other South Korean media outlets also cited anonymous industry sources to report the temporary halt in production.
The Note 7 was part of a new slate of phones that had helped the company regain some ground against Apple, its major rival and the maker of the popular iPhones. The Note 7 sold at premium prices of around $ 900 and featured the curvy contours that had made Samsungâs other new Galaxy phones big sellers.
Samsung is by far South Koreaâs largest and most profitable company, and its smartphones have been one of its key revenue-generating sources in recent years. Its shares were down 3.2 percent by midday Monday, as there was little indication of a quick end to the crisis, which threatens to undermine the brand name Samsung has taken decades to build.
Samsung on Sept. 2 announced a global recall of the 2.5 million Note 7 phones after it emerged that some batteries overheated and caused the phones to catch fire. But the first recall was plagued with complications.
Then consumers later started to report that the new Note 7s issued as replacements also caught fire despite Samsungâs assurance that they used a safe battery. Last week, a Southwest Airlines flight in the United States was evacuated after a Note 7 began smoking inside the plane. The owner and his family told the news media that the phone was a replacement model. Samsung had said it would investigate the incident.
On Sunday, AT&T, the No. 2 wireless carrier in the United States, said it would stop selling or replacing Note 7 smartphones because of reports of fires. The No. 3 carrier, T-Mobile, also said it was temporarily halting sales and exchanges of new Note 7s as well.
SK Telecom and other South Korean mobile carriers have not taken similar steps yet, saying that they were closely monitoring the situation.