Samsung shipped more than 2.5 million Galaxy S7 devices since the smartphone was launched in the third week of August. Samsung in now recalling the devices due to a battery cell issue. Samsung will give replacement or refunds if the user doesn’t want to use the company’s latest flagship anymore. The cost of Note 7 recall is not revealed by the company, head of its smartphone business Dong-jin Koh would only say that it’s a “heartbreaking amount.”
Analyst estimates compiled by Bloomberg suggest that Samsung is going to take a $1 billion hit on the Galaxy Note 7 recall. It will be better for the company to have a short term financial loss if it will not harm the brand. If the company choose not to recall the devices, it will give a long-term damage to its brand.
A flaw in the Note 7’s battery resulted in the positive and negative anodes coming together, leading the device to explode. The battery cells are manufactured by Samsung’s own South Korean subsidiary, Samsung SDI Co. As a result of the issue, Samsung will not be using the SDI batteries in the upcoming units of the Galaxy Note 7 phablet. Samsung CDI batteries are present in at least 70 percent Galaxy Note 7 devices. Samsung SDI shares were significantly declined due to this issue.