Galaxy Note 7 recall costs Samsung around $1 bn

Samsung may face costs of about $1 billion due to issues with the battery of the Galaxy Note 7. The phone was released in August this year. However, 35 customers reported battery explosion battery or fire during charging.

The Korean company, quick to acknowledge the issue recalled about 2.5 million Galaxy Note 7 units from the market. Samsung suspended sales of the device, and carriers in the US are offering replacements until the problem is sorted out. The company had also issued an apology statement to customers.

"We acknowledge the inconvenience this may cause in the market but this is to ensure that Samsung continues to deliver the highest quality products to our customers. We are working closely with our partners to ensure the replacement experience is as convenient and efficient as possible," said Samsung.

The recall of the phone had impacted the sales and the reputation of the company.

Tech times quoted Chang Sea Jin, a professor at the National University of Singapore, "The potential damage to reputation is far greater than short-term financial losses."

When asked about the financial impact of the issue, Koh Dong Jin, Samsung's smartphone business head, did not reveal a figure, but said that it was a "heartbreaking amount.''

Meanwhile, the number of potentially affected devices, which Samsung had estimated at less than 0.01 per cent, might be somewhat higher.

According to reports in The Wall Street Journal and Korea Herald, Samsung had dropped its in-house battery-maker, Samsung SDI, completely from future Note 7s, and opted for Chinese company ATL, which had already provided the battery for some Note 7s.

According to the WSJ, Samsung SDI provided the batteries to 65 per cent of the 2.5 million Note 7 units already sold, while according to Korea Herald the number was closer to 70 per cent. Even if the lower figure was more accurate 65 per cent of 2.5 million worked out to 1,625,000.