Samsung is officially canceling its recently released Galaxy Note 7 line of smartphones in the wake of severe safety concerns.
The Korean electronics manufacturer is halting all manufacturing and distribution of one of its flagship brands, multiple outlets report. The decision comes on the heels of reports that the batteries in the phones were overheating and causing fires, explosions and other significant risks to public health.
These issues were especially problematic for those traveling on airplanes and it became common in the last few weeks to hear flight attendants advise their passengers carrying a Note 7 to power down their devices completely.
Samsung tried to combat the growing issue with a simple recall program. All Note 7 owners, not just those that had noticed issues with their handsets, were advised to power down the device and ship it back to Samsung for a replacement. Then one of the actual replacement phones seems to have caught fire as well.
Faced with growing public outcry and damage to its brand, Samsung has reportedly decided to shutter the Note 7 line altogether rather than risk another failed recall.
The entire ordeal has been devastating financially to Samsung. The company reported earlier that the initial recall would cost them somewhere near $1 billion. The outright cancellation, however, is looking to be even more drastic. According to Bloomberg:
“Samsung Electronics shares fell 8 percent in Seoul Tuesday, wiping out about $17 billion of market value, before the Note 7 termination was announced. The stock dropped further in London trading after the news, sliding as much as 9.9 percent.”
Even for a consumer electronics giant like Samsung these are still highly significant numbers. Continued fallout is expected, especially at the executive level.
We have also reached out to Oculus, which partners with Samsung to produce the Gear VR headset powered by Samsung phones, to see if the company will provide any guidance to developers who have invested time creating for the Gear VR system. It was previously announced that Oculus was temporarily removing Note 7 support from the Gear VR in light of the safety issues. At this time no further comment has been issued.