SEOUL • Samsung shares plunged yesterday after the South Korean electronics giant urged global consumers to stop using its Galaxy Note7 smartphone because of a spate of exploding batteries that raised alarm around the world.
Stepping up its warnings, the world's largest smartphone maker on Sunday told Note7 users worldwide to immediately turn the device off. Samsung Electronics on Sept 2 had announced a recall of its oversized phablet after faulty batteries caused some handsets to burst into flames during charging.
Since then, airlines and air-safety agencies around the world have warned passengers against using them on flights. The United States Consumer Product Safety Commission last Friday urged Note7 owners to stop using the device.
Shares in the firm - South Korea's largest by value - dropped 7 per cent to close at 1.46 million won on the Seoul stock market - the lowest in two months. It was the biggest daily drop in the firm's share price so far this year and shaved about 17.5 trillion won (S$21.5 billion) off the firm's total value.
Samsung Securities analyst Hwang Min Sung said: "The whole situation over Samsung is becoming more serious and complicated as more state authorities around the world are advising (their) nationals to stop using the Note7."
He warned that the fallout from the recall - which involves 2.5 million handsets sold so far in 10 countries - may slash the firm's profit later this year by more than one trillion won.
The recall, the first involving its flagship smartphone, has dealt a big blow to the firm's reputation at a time when it faces a growing challenge in all market segments.
Samsung, increasingly squeezed by Apple's iPhone in the high-end market and Chinese rivals in the low-end segment, launched the Note7 earlier than expected - ahead of the Sept 7 launch of the iPhone 7.
The mobile business accounts for a major share of profits for Samsung, which also produces home appliances and memory chips.
Mr Koh Dong Jin, the head of Samsung's mobile business, said earlier the fault rate for the Note7 amounted to 24 handsets per million and that it would take about two weeks to prepare replacements.
A new Note7 device with a new battery will be provided to South Korean consumers starting Sept 19.
Growing concern over the device prompted air carriers and aviation authorities in countries, including the US, Australia, Canada, Japan, Singapore, Indonesia and India, to ban the use of the Note7 on board.
But cases of exploding batteries continued to emerge following the recall announcement, as users claimed a burning device had damaged a hotel room in Australia and another set a car in the US on fire.
Samsung currently uses batteries made by a number of different firms, including its sister firm Samsung SDI. It refused to identify the supplier of the faulty battery but said sales in China, where it uses a different supplier, would be unaffected.
AGENCE FRANCE-PRESSE
