SEOUL (Reuters) - Samsung Electronics Co Ltd has recalled all Galaxy Note 7 smartphones equipped with batteries it has found to be fire-prone and halted their sales in 10 markets, denting a revival of the firm’s mobile business.

Koh Dong-jin, head of the South Korean company’s smartphone business, declined to comment on how many phones needed to be replaced, but said Samsung had sold 2.5 million of the premium devices so far.

Speaking at a news conference on Friday, Koh expressed regret over the recall, which will affect markets including South Korea and the United States. Models in China feature a different battery and are not being recalled by Samsung, the world’s biggest smartphone vendor.

The recall comes just over two weeks after the company launched its latest premium phone, which features an outsized screen and high-resolution camera. It follows reports of the 988,900 won ($885) phone igniting while charging.

The manufacturer plans to replace not only phones with faulty batteries sold to consumers, but also retailer inventories and units in transit. Nomura estimated that more than 1 million units have been sold to end consumers.

“I can’t comment on exactly how much the cost will be, but it pains my heart that it will be such a big number,” Koh said.

Strategy Analytics said the combined cost of the recall and lost sales would lop $5 billion off Samsung’s smartphone revenue this year and cut smartphone profit margin by 1.5 percent.

The scale of the recall is unprecedented for Samsung, which prides itself on its manufacturing prowess. While recalls in the smartphone industry do happen, including for rival Apple Inc, the nature of the problem for the Galaxy Note 7 is a serious blow to Samsung’s reputation, analysts said.

The company should act quickly to minimize damage to its smartphone recovery, after a string of product successes had reversed a fall in market share, they added.

CUSTOMERS PUT ON HOLD

The phone first launched in 10 markets in North America, Asia and the Middle East. Further roll-outs have occurred since in markets like China, where sales started just this week. Its wider availability, set for coming weeks, is now on hold.

While there are occasional reports of phones catching fire or otherwise burning users, documented cases that lead to widespread product recalls remain relatively rare. Samsung said it was aware of 35 reports of affected Note 7 batteries.

In 2007, the largest battery recall in consumer electronics history took place when Nokia, then the world’s top mobile handset maker, offered to replace 46 million phone batteries produced for it by Japanese maker Matsushita Battery.

An employee poses for photographs with Samsung Electronics' Galaxy Note 7 new smartphone at its store in Seoul, South Korea, September 2, 2016. REUTERS/Kim Hong-Ji

Germany’s biggest operator, Deutsche Telekom, said it had stopped delivering orders for the Galaxy Note 7, while French operator Orange said on its website that it had stopped pre-sales of the phone and postponed its planned sales launch - scheduled for Friday.

In Britain, mobile carriers EE and Vodafone continue to accept pre-orders for the Note 7 on their sites. A Vodafone spokesman said its planned Sept. 19 sales launch could now slip, but the company was waiting for more details from Samsung to decide.

U.S. operators have been taking pre-orders since early August. All major wireless carriers, including No. 1 U.S. wireless provider Verizon Communications Inc, said they had stopped selling the Galaxy Note 7. Samsung said in a separate statement it started an exchange program in the country for the Note 7.

Major U.S. retailers Best Buy and Target also said they had halted sales of the Note 7.

Verizon said that if a customer wants to return or exchange the Galaxy Note 7, it would waive through Sept. 30 the restocking fee it charges customers. T-Mobile US, majority owned by Deutsche Telekom, said in a statement it would also waive restocking and shipping charges to customers who want to return the recalled phone.

SECOND-HALF HOPES

Samsung has said it aimed for the Note 7 to maintain strong sales momentum in the second half of the year against stiffening competition from the likes of Apple, which is widely expected to release its latest iPhone next week.

Strategy Analytics said Samsung will likely sell fewer than 10 million Note 7s this year compared with its previous estimate of 14 million globally.

Samsung said new sales of the Note 7 in affected markets would resume after it deals with replacements, a process it expects will begin in about two weeks. The firm would extend refund periods for affected customers and offer exchanges for other Samsung phones, Koh said.

Investors sold Samsung shares after the delay announcement on Thursday, stripping about $7 billion from the firm’s market value, which remains just off recent record highs. Sentiment recovered somewhat in trading on Friday as the shares rose 0.6 percent compared with 0.3 percent in the broader market.

Credit Suisse said a recall or major shipment delays could wipe 1.5 trillion won ($1.34 billion) from Samsung’s 2016 operating profit estimate of 30.2 trillion won in an “absolute worst case” scenario.

But the brokerage said that scenario was unlikely, as it expected Samsung to resolve the problem before the fourth quarter.

HI Securities analyst James Song said the replacement costs may be somewhat limited as Samsung could recycle components of the recalled phones.

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“It is clever for Samsung to replace the affected models, not offering fixes,” he said, adding this would help consumer confidence.

Samsung’s mobile division accounted for about 54 percent of the firm’s January-June operating profit of 14.8 trillion won.

($1 = 1,117.4300 Korean won)</s>Samsung Elec says to halt Galaxy Note 7 sales on battery problem

SEOUL, Sept 2 (Reuters) - Tech giant Samsung Electronics Co Ltd said on Friday it will halt the sales of its Galaxy Note 7 smartphones and will prepare replacement devices for phones already sold after finding problems with the battery cell used.

Samsung, in a statement, said it will take about two weeks to prepare replacement devices for the phones already sold. It was not clear when new sales of the devices would begin. (Reporting by Se Young Lee; Editing by Christopher Cushing)</s>SEOUL, South Korea—Samsung Electronics Co. Ltd. recalled all Galaxy Note 7 smartphones equipped with batteries it has found to be fire-prone and halted their sales in 10 markets, denting a revival of the firm's mobile business.

Koh Dong-jin, head of the South Korean company's smartphone business, expressed regret over the recall, which will affect markets including South Korea and the United States, at a news conference on Friday.

Models in China feature a different battery and are not being recalled by the world's biggest smartphone vendor.

The recall comes just over two weeks after the launch of Samsung's latest premium phone, which features an outsized screen and high-resolution camera, and follows reports of the $885 phone igniting while charging.

Koh, who declined to comment on the number of phones needing replacement, said Samsung had sold 2.5 million of the premium devices so far. The manufacturer plans to replace not only phones with faulty batteries sold to consumers, but also retailer inventories and units in transit.

"I can't comment on exactly how much the cost will be, but it pains my heart that it will be such a big number," he said.

The scale of the recall is unprecedented for Samsung, which prides itself on its manufacturing prowess. While recalls in the smartphone industry do happen, including for rival Apple Inc. the nature of the problem for the Galaxy Note 7 is a serious blow to Samsung's reputation, analysts said.

It must act quickly to minimize damage to its smartphone recovery, after a string of product successes had reversed a fall in market share, they added.

The phone first launched in 10 markets in North America, Asia and the Middle East. Further roll-outs have occurred since in markets like China, where sales started just this week. Its wider availability, set for coming weeks, is now on hold.

Germany's biggest operator Deutsche Telekom said it had stopped delivering orders for the Galaxy Note 7, while French operator Orange said on its website that it had stopped pre-sales of the phone and postponed its planned sales launch - scheduled for Friday.

In Britain, mobile carriers EE and Vodafone continue to accept pre-orders for the Note 7 on their sites. A Vodafone spokesman said its planned September 19 sales launch could now slip, but was waiting for more details from Samsung to decide.

U.S. operators have been taking pre-orders since early August. The No.1 U.S. wireless carrier Verizon Communications Inc. said it has stopped selling the Galaxy Note 7 in light of customer safety.

If a customer wants to return or exchange the Galaxy Note 7, Verizon said it would waive the restocking fee it charges customers through September 30.

T-Mobile US, majority owned by Deutsche Telekom, also said it has suspended sales, while AT&T and Sprint could not be reached immediately for comment.</s>Samsung has suspended sales of its Galaxy Note 7, two weeks after the flagship smartphone's launch, after finding batteries in some of the gadgets exploded while they were charging.

Koh Dong-jin, president of Samsung's mobile business, said customers who had already bought Note 7s will be able to swap them for new smartphones, regardless of when they purchased them.

Samsung is issuing what amounts to its first global recall of the flagship smartphone because it has not found ways to specify which phones may endanger users.

Note 7s are being pulled from shelves in 10 countries, including South Korea and the US.

Mr Koh said the company's investigation found that a battery cell made by one of its two battery suppliers caused the phone to catch fire. He refused to name the supplier.

"There was a tiny problem in the manufacturing process so it was very difficult to find out," he told reporters at a news conference.

Some buyers reported their phones had caught fire or exploded while charging, sharing photos of scorched phones on social media. Samsung said it had confirmed 35 cases in South Korea and overseas.

There have been no reports of injuries related to the problem.

Samsung said it has sold more than a million Note 7 smartphones since the August 19 launch. It has manufactured about 2.5 million Note 7 phones so far, some of them still in inventory. Mr Koh said they will be returned and swapped for new ones.

The company estimated it would take about two weeks to begin swapping old Note 7s for new phones.

China is not affected by the sales suspension. The company said it used a battery made by another supplier for the version sold in China.</s>SEOUL, South Korea (AP) — Samsung recalled its Galaxy Note 7 smartphones on Friday after finding some of their batteries exploded or caught fire.

Samsung’s Note 7s are being pulled from shelves in 10 countries, including South Korea and the United States, just two weeks after the product’s launch. Customers who already bought Note 7s will be able to swap them for new smartphones in about two weeks, said Koh Dong-jin, president of Samsung’s mobile business.

He apologized for causing inconvenience and concern to customers.

The recall, the first for the new smartphone, comes at a crucial moment in Samsung’s mobile business. Apple is expected to announce its new iPhone next week and Samsung’s mobile division was counting on momentum from the Note 7’s strong reviews and higher-than-expected demand.

Samsung said it had confirmed 35 instances of Note 7s catching fire or exploding. There have been no reports of injuries related to the problem.

The company said it has not found a way to tell exactly which phones may endanger users out of the 2.5 million Note 7s already sold globally. It estimated that about 1 in 42,000 units may have a faulty battery.

Samsung’s official statement was silent on whether customers should stop using their phones, and it didn’t say whether the problems happened while the phones were charging or during normal use.

This summer, Samsung ran into a quality-control issue with another smartphone, a niche model called the Galaxy S7 Active. Consumer Reports found that the phone didn’t live up to its water-resistance promises. Samsung said that relatively few phones were affected and that it had identified and fixed the manufacturing problem. Samsung said it would replace devices under warranty if it failed, but it declined to let customers swap phones otherwise or to issue a broader recall.

On the Note 7, after complaints surfaced online, Samsung found that a battery cell made by one of its two battery suppliers caused the phone to catch fire. Koh refused to name the supplier.

“There was a tiny problem in the manufacturing process, so it was very difficult to figure out,” Koh told reporters at a news conference. “It will cost us so much it makes my heart ache. Nevertheless, the reason we made this decision is because what is most important is customer safety.”

Customers’ reports of scorched phones prompted Samsung to conduct extra quality controlling tests and delay shipments of the Note 7s this week before the recall.

South Korean high school teacher Park Soo-Jung said she had rushed to buy the new phone, pre-ordering and then activating it on Aug. 19, its official launch date.

The 34-year-old living in the port city of Busan said that she was bruised when she rushed out of bed after her phone burst into flames, filling her bedroom with smoke stinking of chemicals.

She’s having second thoughts about buying another newly released device, especially after losing all her personal data stored in the destroyed Note 7, she said.

“If the exploded phone had burned near my head, I would not have been able to write this post,” she said in a popular online forum Thursday, where she shared a photo of the scorched Note 7 and described dousing the flames.

China is not affected by the sales suspension. The company said it used a battery made by another supplier for the Note 7s sold in China.

Lee can be reached on Twitter: www.twitter.com/YKLeeAP

Her previous works can be found on: http://bigstory.ap.org/content/youkyung-lee</s>Samsung recalled its Galaxy Note 7 smartphones on Friday after finding some of their batteries exploded or caught fire.

Samsung's Note 7s are being pulled from shelves in 10 countries, including South Korea and the United States, just two weeks after the product's launch. Customers who already bought Note 7s will be able to swap them for new smartphones in about two weeks, said Koh Dong-jin, president of Samsung's mobile business.

He apologized for causing inconvenience and concern to customers.

The recall, the first for the new smartphone though not the first for a battery , comes at a crucial moment in Samsung's mobile business. Apple is expected to announce its new iPhone next week and Samsung's mobile division was counting on momentum from the Note 7's strong reviews and higher-than-expected demand.

Samsung said it had confirmed 35 instances of Note 7s catching fire or exploding. There have been no reports of injuries related to the problem.

The company said it has not found a way to tell exactly which phones may endanger users out of the 2.5 million Note 7s already sold globally. It estimated that about 1 in 42,000 units may have a faulty battery.

Samsung didn't say whether customers should stop using their phones, or whether explosions and fires could happen when the phone wasn't charging. Consumers who complained publicly said the problem came while the phone was being charged.

"The ball is in Samsung's court to make this right. Consumers want information about what's going on and peace of mind that this is not going to happen again," said Ramon Llamas, who tracks mobile devices at research firm IDC. "No one wants to wake up at 1, 2 or 3 (in the morning) and find out your smartphone's on fire."

He added that while phone combustions are unusual, "35 instances are 35 too many."

This summer, Samsung ran into a quality-control issue with another smartphone, a niche model called the Galaxy S7 Active. Consumer Reports found that the phone didn't live up to its water-resistance promises. Samsung said that relatively few phones were affected and that it had identified and fixed the manufacturing problem. Samsung said it would replace devices under warranty if it failed, but it declined to let customers swap phones otherwise or to issue a broader recall.

On the Note 7, after complaints surfaced online, Samsung found that a battery cell made by one of its two battery suppliers caused the phone to catch fire. Koh refused to name the supplier.

"There was a tiny problem in the manufacturing process, so it was very difficult to figure out," Koh told reporters at a news conference. "It will cost us so much it makes my heart ache. Nevertheless, the reason we made this decision is because what is most important is customer safety."

The phones start at $850 in the U.S., more expensive than most phones. In the U.S., Samsung said it will let customers downgrade to a Galaxy S7 and refund the price difference. Or customers can get a replacement Note 7 as early as next week.

Customers' reports of scorched phones prompted Samsung to conduct extra quality controlling tests and delay shipments of the Note 7s this week before the recall.

South Korean high school teacher Park Soo-Jung said she had rushed to buy the new phone, pre-ordering and then activating it on Aug. 19, its official launch date.

The 34-year-old living in the port city of Busan said that she was bruised when she rushed out of bed after her phone burst into flames, filling her bedroom with smoke stinking of chemicals.

She's having second thoughts about buying another newly released device, especially after losing all her personal data stored in the destroyed Note 7, she said.

"If the exploded phone had burned near my head, I would not have been able to write this post," she said in a popular online forum Thursday, where she shared a photo of the scorched Note 7 and described dousing the flames.

China is not affected by the sales suspension. The company said it used a battery made by another supplier for the Note 7s sold in China.</s>Tech giant Samsung Electronics said on Friday it will halt the sales of its Galaxy Note 7 smartphones in 10 markets , including Ireland, and will prepare replacements for phones already sold after finding problems with the battery cell. The phone was due to go on sale in Ireland, and across Europe, today, and was set to sell from €149 in Ireland.

In a statement, Samsung said the problems have been reported in 35 phones globally, and that the company is conducting a thorough inspection with its suppliers to identify possible affected batteries in the market.

“However, because our customers’ safety is an absolute priority at Samsung, we have stopped sales of the Galaxy Note 7,” the company said.

Samsung said it will voluntarily replace Galaxy Note 7s that Irish customers already have, over the coming weeks. For more information customers can contact 01-6950367.

The scale of the recall is unprecedented for Samsung, which prides itself on its manufacturing prowess. While recalls in the smartphone industry do happen, including for rival Apple, the nature of the problem for the Galaxy Note 7 is a serious blow to Samsung’s reputation, analysts said.

Analysts said the firm must act quickly to minimise damage to its smartphone recovery, after a string of product successes had reversed a fall in market share at the world’s biggest smartphone seller. The firm has said it aimed for the Note 7 to maintain strong sales momentum in the second half of the year against stiffening competition from the likes of Apple, which is expected to release its latest iPhone next week.

“I am concerned more about a potential reduction in sales than recall costs,” said analyst Jay Yoo at Korea Investment and Securities. “The recall is likely to be a blow to earnings.”

Samsung said new sales of the Note 7 in affected markets would resume after it deals with replacements, a process it expects will begin in about two weeks.

Investors sold Samsung shares after the delay announcement on Thursday, stripping about $7 billion from the firm’s market value. Sentiment recovered somewhat in Friday trade as the shares rose 0.6 per cent compared with 0.3 per cent in the broader market. Credit Suisse said a recall or major shipment delays could wipe 1.5 trillion won (€1.19bn) from Samsung’s 2016 operating profit estimate of 30.2 trillion won in an “absolute worst case” scenario. But the brokerage said that was unlikely, as it expected Samsung to resolve problem before the fourth quarter of the year.</s>Samsung is set to issue a global recall of the Galaxy Note 7 smartphone as soon after its investigation into explosion claims found batteries were at fault.

The move comes after reports that batteries in some of the jumbo smartphones exploded while they were being charged. Samsung launched the latest version of the Note series just two weeks ago.

Samsung Electronics declined to comment on the report, but said it was conducting the inspection with its partners.
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"We will share the findings as soon as possible. Samsung is fully committed to providing the highest quality products to our consumers," the company said.

Shipments of the Galaxy Note 7 smartphone were delayed in South Korea this week for extra quality control testing.

Citing an unnamed company official, Yonhap said Samsung's investigation found that faulty batteries caused the phone to catch fire.

The number of the Galaxy Note 7 phones with a faulty battery accounts for "less than 0.1%" of the products on the market and Samsung is discussing how to resolve the issue with Verizon and its other partners, the official told Yonhap.

The battery issue is a fresh blow to Samsung's smartphone business that has been on a recovery track.
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Samsung reported stellar earnings that beat market expectations in the latest quarter and its stock price was at a record high before the Note 7's battery problems dented investor sentiment. Samsung's share rose 0.8% early on Friday. The stock closed 2% lower in the previous session.

Despite the investigation in South Korea, Samsung went ahead with its scheduled launch on Thursday of the Galaxy Note 7 in China.

Company officials did not reply to questions about how Samsung determined which phones are deemed safe and which require further testing. It did not say if those phones are different from the ones sold in South Korea.

Yonhap News said five or six explosions were reported by consumers. It cited pictures of severely damaged phones shared in local online communities, social media and YouTube.

There were no confirmed reports of any injuries.

It is unusual for Samsung to confirm a delay in sales of a device, and rare for it to cite a quality issue.

The Galaxy Note 7 smartphone is the latest in Samsung's Note series that feature a giant screen and a stylus.

The Note series smartphones are one of the most expensive line-ups released by Samsung and usually inherit designs and features of the Galaxy S series that debut in the spring.

Samsung also added an iris scanner to the Note 7, which lets users unlock the phone by detecting patterns in the eyes.

Samsung launched the Note 7 on August 19 in some markets, including South Korea and the US.

Even before the issue of battery explosions emerged, supplies were not keeping up with higher-than-expected demand for the smartphone.

For UK customers who already have Galaxy Note7 devices, they will voluntarily replace their current device with a new one over the coming weeks.

For more information customers need to contact the customer service team on 0330 7261000.</s>Samsung Electronics recalled all of its Galaxy Note 7 smartphones on Friday after finding batteries of some of the flagship gadgets exploded or caught fire.

Samsung's Note 7s are being pulled from shelves in 10 countries, including South Korea and the United States, just two weeks after the product's launch. Customers who already bought Note 7s will be able to swap them for new smartphones in about two weeks, said Koh Dong-jin, president of Samsung's mobile business.

He apologized for causing inconvenience and concern to customers.

The recall, the first for the new smartphone, comes at a crucial moment in Samsung's mobile business. Apple is scheduled to announce its new iPhone next week and Samsung's mobile division was counting on momentum from the Note 7's strong reviews and higher-than-expected demand.

Samsung said it had confirmed 35 instances of Note 7s catching fire or exploding. There have been no reports of injuries related to the problem.

The company said it has not found a way to tell exactly which phones may endanger users out of the 2.5 million Note 7s already sold globally. It estimated that about 24 out of 1 million units may have a faulty battery.

After complaints surfaced online, Samsung found that a battery cell made by one of its two battery suppliers caused the phone to catch fire. Koh refused to name the supplier.

"There was a tiny problem in the manufacturing process, so it was very difficult to figure out," Koh told reporters at a news conference. "It will cost us so much it makes my heart ache. Nevertheless, the reason we made this decision is because what is most important is customer safety."

Customers' reports of scorched phones prompted Samsung to conduct extra quality controlling tests and delay shipments of the Note 7s this week before the recall.

South Korean high school teacher Park Soo-Jung said she had rushed to buy the new phone, pre-ordering and then activating it on Aug. 19, its official launch date.

The 34-year-old living in the port city of Busan said that she was bruised when she rushed out of bed after her phone burst into flames, filling her bedroom with smoke stinking of chemicals.

She's having second thoughts about buying another newly released device, especially after losing all her personal data stored in the destroyed Note 7, she said.

"If the exploded phone had burned near my head, I would not have been able to write this post," she said in a popular online forum Thursday, where she shared a photo of the scorched Note 7 and described dousing the flames.

China is not affected by the sales suspension. The company said it used a battery made by another supplier for the Note 7s sold in China.</s>Technology giant Samsung Electronics says it is suspending the sales of its brand new Galaxy Note 7 smartphones over faulty batteries. Speaking on Friday, Koh Dong-jin, president of Samsung’s mobile business, adds that replacement devices for phones already sold will be made available to customers. The new Galaxy Note 7 was launched two week ago
Samsung Electronics recalls all Galaxy Note 7 smartphones that have fire-prone batteries, and halts sales in 10 markets. A Samsung official says phones with the problematic battery account for less than 0.1 percent of those sold.