[et_pb_section bb_built=”1″ admin_label=”section”][et_pb_row admin_label=”row”][et_pb_column type=”4_4″][et_pb_post_title admin_label=”Post Title” _builder_version=”3.0.51″ title=”on” meta=”off” author=”on” date=”on” categories=”on” comments=”on” featured_image=”off” featured_placement=”below” parallax_method=”on” text_orientation=”left” text_color=”dark” text_background=”off” border_style=”solid” \/][\/et_pb_column][\/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Text” _builder_version=”3.0.51″ background_layout=”light” text_orientation=”left” border_style=”solid”]<\/p>\n
Yoolim Lee, Hooyeon Kim and Sohee Kim, October 10th 2016<\/p>\n
Samsung Electronics Co.<\/em>\u00a0<\/em>halted sales of its Galaxy Note 7 smartphones and asked consumers to stop using the ones they\u2019ve already purchased, another blow to South Korea\u2019s largest company as it struggles with a crisis over exploding batteries. Shares plunged, cutting $17 billion from its market value.<\/em><\/p>\n Samsung has already recalled the Note 7 once and the latest move comes after customers reported that replacement phones were also catching fire. Samsung may be forced to scrap an entire generation of Note smartphones, one of its two most important phone lines, a severe setback in its competition with rivals like Apple Inc.<\/p>\n The crisis has left Samsung scrambling to figure out the cause of the battery fires and to explain how a company known for manufacturing expertise could have missed such a critical product flaw twice. Samsung originally blamed one battery supplier for the problems and switched to an alternative company, but it is now investigating the issue again.<\/p>\n \u201cIt must find the cause and clearly say what it will do about it,\u201d said Yoo Jong-woo, an analyst at Korea Investment & Securities Co. \u201cThat way customers won\u2019t feel uneasy when buying other Samsung phones.”<\/p>\n Samsung shares\u00a0fell\u00a08 percent, the largest drop since 2008. The company has\u00a0growing competition\u00a0for customers shopping for premium smartphones as they head into the holiday shopping season. Apple just introduced its iPhone 7 and Google came out with its Pixel smartphone, which runs on the same Android software as Samsung\u2019s devices.<\/p>\n Samsung\u2019s announcement came after consumers reported problems with supposedly safe phones in the U.S. and China, and wireless carriers such as AT&T Inc. and Australia\u2019s Telstra Corp. halted sales. In one case, a Southwest Airlines Co. flight from Louisville, Kentucky, was evacuated because a replacement Note 7 began dispersing smoke and burned carpet flooring.<\/p>\n Regulators in Korea and the U.S. also asked Samsung to stop selling or exchanging the phones. \u201cDue to the ongoing safety concerns associated with Galaxy Note 7 phones, it is the right move for Samsung to suspend the sale and exchange of all Galaxy Note 7s,\u201d said Elliot Kaye, chairman of the U.S. Consumer Product Safety Commission. Samsung said Tuesday it is cooperating with the regulator on the probe.<\/p>\n In China, the General Administration of Quality Supervision, Inspection and Quarantine said Samsung would widen its recall to more than 190,000 Note 7s, one hundred times the number first announced. Major Chinese e-commerce websites, including JD.com and Alibaba Group Holding Ltd.\u2019s Tmall.com, withdrew the Note 7 from sale as of Tuesday.<\/p>\n Responsibility for leading the company through crisis has fallen to\u00a0Jay Y. Lee, vice chairman and heir apparent at Korea\u2019s largest conglomerate. His father and family patriarch\u00a0Lee Kun-hee, who remains chairman, has been hospitalized for more than two years after a heart attack. The phone unit is run by D.J. Koh, who took over in December.<\/p>\n The Note 7 debuted to rave reviews in August, but the plaudits turned to criticism within weeks as phones exploded and images of charred handsets began appearing on social media.\u00a0Samsung announced the first recall in Korea on Sept. 2, calling back the initial shipment of 2.5 million phones and then replacing them with what it said were safe devices. The flaw, it explained, was with the primary battery supplier, which a person familiar with the matter identified as affiliate Samsung SDI Co. All new phones would have batteries from another manufacturer.<\/p>\n The company has not said how many new or replacement phones will be affected by the latest sales halt. Analysts estimated that the original recall would cost between $1 billion and $2 billion, but that figure will now certainly rise.<\/p>\n The drama may give an opening to activist investor\u00a0Paul Elliott Singer, who is advocating for a break up of South Korea\u2019s biggest company. Singer\u00a0proposed\u00a0that Samsung separate into an operating company and a holding company, dual-list the former on a U.S. exchange, pay shareholders a special dividend of 30 trillion Korean won ($27 billion) and improve governance by adding three independent board members.<\/p>\n The impact may spread to suppliers for Samsung and its rivals. On Tuesday, technology shares had the biggest declines as a group in the MSCI Asia Pacific Index, with fortunes split between suppliers to Samsung and Apple. In Taiwan, shares of Radiant Opto-Electronics Corp., a Samsung supplier, plunged 6.3 percent while HannsTouch Solution Inc. lost 9.8 percent. Among makers of iPhone components, Japan Display Inc. climbed 3.5 percent and Hon Hai Precision Industry Co. rose 1.4 percent.<\/p>\n The immediate question is whether Samsung is going to scrap the Note 7 for good or try to reintroduce a fixed version, a decision that will affect suppliers inside and outside the conglomerate. Beyond that, the company will have to assess the impact on future phones.<\/p>\n \u201cWhat happens to the next version of the phone when it comes out and how much this is going to impact the sales?\u201d said Dan Baker, an analyst at Morningstar Inc. in Hong Kong. \u201cIt\u2019s not just the phone; their whole ecosystem is behind this — displays, memory chips. If their phone sales drop, then their sales of other parts of the business will be impacted. It\u2019s a spiral.\u201d<\/p>\n <\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" Samsung market value plummets USD$ 17 billion on Note 7 Sales Halt Yoolim Lee, Hooyeon Kim and Sohee Kim, October 10th 2016 Samsung Electronics Co.\u00a0halted sales of its Galaxy Note 7 smartphones and asked consumers to stop using the ones they\u2019ve already purchased, another blow to South Korea\u2019s largest company as it struggles with a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"project_category":[],"project_tag":[],"class_list":["post-62","project","type-project","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/www.valuereputationadvisory.com\/index.php?rest_route=\/wp\/v2\/project\/62","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.valuereputationadvisory.com\/index.php?rest_route=\/wp\/v2\/project"}],"about":[{"href":"https:\/\/www.valuereputationadvisory.com\/index.php?rest_route=\/wp\/v2\/types\/project"}],"author":[{"embeddable":true,"href":"https:\/\/www.valuereputationadvisory.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.valuereputationadvisory.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=62"}],"version-history":[{"count":2,"href":"https:\/\/www.valuereputationadvisory.com\/index.php?rest_route=\/wp\/v2\/project\/62\/revisions"}],"predecessor-version":[{"id":119,"href":"https:\/\/www.valuereputationadvisory.com\/index.php?rest_route=\/wp\/v2\/project\/62\/revisions\/119"}],"wp:attachment":[{"href":"https:\/\/www.valuereputationadvisory.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=62"}],"wp:term":[{"taxonomy":"project_category","embeddable":true,"href":"https:\/\/www.valuereputationadvisory.com\/index.php?rest_route=%2Fwp%2Fv2%2Fproject_category&post=62"},{"taxonomy":"project_tag","embeddable":true,"href":"https:\/\/www.valuereputationadvisory.com\/index.php?rest_route=%2Fwp%2Fv2%2Fproject_tag&post=62"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}