WASHINGTON (BLOOMBERG, REUTERS) - Samsung Electronics could face an unusual second recall of its Note7 smartphones if one that caught fire aboard an airliner this week is a replacement device as its owner says, two former US safety officials said.
The Federal Aviation Administration and the Consumer Product Safety Commission are investigating Wednesday's incident, when a passenger's phone emitted smoke on a Southwest Airlines. plane readying for departure from Louisville, Kentucky. A flight attendant doused it with a fire extinguisher, and the plane was evacuated without injury.
"If it's the fixed phone and it started to smoke in his pocket, I'm going to guess there'll be another recall," said Pamela Gilbert, a former executive director of the consumer agency. "That just doesn't sound right."
Samsung has been engulfed in crisis since the Note7 smartphones began to burst into flames just days after hitting the market in August. The company announced last month that it would replace all 2.5 million phones sold globally at that point. Samsung said it had uncovered the cause of the battery fires and that it was certain new phones wouldn't have the same flaws.
Samsung on Friday (Oct 7) issued a profit guidance that beat estimates despite Note7 woes. It expects third-quarter operating profit grew 5.6 per cent to 7.8 trillion won, beating estimates of 7.4 trillion won, as a pickup in chip and display earnings likely offset the impact of the Note7 recall. A year earlier operating profit was 7.4 trillion won. Revenue for the quarter likely fell 5.2 per cent to 49 trillion won, Samsung said.
Samsung disclosed only overall estimates in its filing, and isn't scheduled to issue full results until late October. It also made no comment in the filing on how much the Note7 recall might cost.
Nancy Nord, a former acting chairwoman of the safety commission, said a second recall doesn't happen very often.
"Certainly they could do another recall, if it appears this is something beyond an aberration," she said.
"They need to determine if this was a remediated phone, and if so why did this happen?" said Ms Nord, who is of counsel at Olsson Frank Weeda Terman Matz PC in Washington.
CPSC spokesman Scott Wolfson declined to comment on what action may be taken.
Bloomberg News last week interviewed a customer in China who said his new Note7 had exploded less than 24 hours after it was delivered. The company said it was investigating the incident.
The owner of the phone involved in Wednesday's incident told investigators it was a replacement Note7, said Captain Kevin Fletcher of the Louisville Metro Arson Squad.
"Due to the damage to the phone itself, we have not been able to physically confirm that yet," Mr Fletcher said during an interview. "We're in the process of trying to attempt that."
Samsung, FAA and Consumer Product Safety Commission representatives were in Louisville and working with arson investigators, Mr Fletcher said. The phone remains in the possession of the arson squad, which is trying to schedule laboratory tests on the phone. It hasn't been determined where or when those tests will occur, Fletcher said.
There was "extensive heat damage" to the phone and the plane's carpet, he said.
Brian Green, the phone's owner, told WAVE television news in Louisville that he got a replacement phone at a retail store after receiving an e-mail about the recall.
On the plane, he turned the phone off and put it in his pocket. The device made a popping sound and sent "smoke just billowing out of my clothes," Mr Green said. He dropped it to avoid getting hurt.
Samsung said in a statement on Wednesday that it couldn't confirm that the incident involved the new phone but would have more information after examining the device. The company didn't offer an update on Thursday and a spokeswoman had no immediate reply to a request for comment on the possibility of another recall.
Samsung had raced to complete the introduction of the Note7 before Apple could unveil its new iPhone 7. The Note7 features a larger battery that can store more power than its predecessor.
A battery supplier made the power packs slightly too large for the phone's compartment, the consumer safety commission said when announcing the recall Sept 15. As a result, the battery components were sometimes pinched, which could cause a short circuit, according to the agency.
Rechargeable lithium-ion cells like those in the Samsung phones are made with highly flammable chemicals. When they fail, they can generate intense heat or sparks that can ignite those chemicals.
The United Nations International Civil Aviation Organization earlier this year banned bulk shipments of lithium-ion cells from passenger flights after tests showed that they could violently explode even after being doused with fire extinguishers.
Three cargo aircraft have been destroyed in fires linked to lithium battery shipments since 2006.