Samsung Electronics took another hit today over its recalled Galaxy Note 7 smartphone, acknowledging it was "adjusting production" of the device after major distributors stopped offering replacements because of continued safety concerns.
The South Korean electronics giant has struggled since issuing a global recall in early September for 2.5 million of its flagship Galaxy Note 7 "phablet" following complaints that the lithium-ion battery exploded. Reports have since emerged of replacement units also catching fire, prompting US telecommunications firm AT&T and German rival T-Mobile to announce Sunday a halt to recall exchanges pending further investigations. Their announcement prompted a steep dive in Samsung's share price, which fell more than four percent at one point in morning trade. It recovered later to close the day at 1.68 million won ($1,515)-- down 1.52 per cent.
The market was also reacting to a South Korean media report that Samsung had temporarily shut down Note 7 production lines after discussions with consumer safety regulators from South Korea, the United States and China.
"We are in the process of adjusting production volumes," Samsung -- the world's largest maker of smartphones -- said in a written response to the report. The company said the move was "to enhance quality control and to enable thorough investigations following the recent cases of Galaxy Note 7 explosions".
Analysts have suggested that Samsung, battling ever-fiercer competition in the saturated smartphone market, may have rushed production of the Note 7 with bitter rival Apple's recently released iPhone 7 in mind.
The top-of-the-line Note 7 was crucial to Samsung's growth plans this year, with the company struggling to boost sales, squeezed by Apple in the high-end sector and Chinese rivals in the low-end market, as profit has stagnated.
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