• Quality Control Testing Delays Shipments of Samsung’s Galaxy Note 7

    Quality Control Testing Delays Shipments of Samsung’s Galaxy Note 7

    “Shipments of the Galaxy Note 7 are being delayed due to additional tests being conducted for product quality,” Samsung said in a statement to Reuters. As a result, there are already reports of Samsung investor concerns. According to a Reuters report, share prices of Samsung stock have dropped by as much as $7 billion in reaction to the bad news.

    Exploding Battery

    Samsung Electronics Co. Ltd. is holding off on shipping the new Galaxy Note 7 smartphone. There were several unconfirmed local reports of users experiencing an exploding battery while the smartphone battery was charging. The latest Samsung smartphone is the first model to come with a USB-C connector. The new connector has a new charging standard. Some third-party cables caused damage to Samsung consumer electronics products. The new port was unable to handle the connection of some non-compliant third-party cables. As a result, Samsung called for additional quality control testing of their products. The company also is holding off on further shipments of their latest flagship smartphone.

    Consequences of Samsung’s Stock Decrease

    Investors pushed down prices of Samsung’s stock to a two-week low after learning about the Galaxy Note 7 shipment delay. This is not good news for Samsung. The company was hoping that the release of the Galaxy Note 7 would compete with Apple’s release of the Apple iPhone 7. Apple is a major competitor of Samsung Electronics Co. Ltd’s mobile phone business. A leader in the consumer electronics industry, Samsung was depending upon their Galaxy Note 7 flagship smartphone to maintain its strong consumer electronics earnings momentum during the second half of the year.

    Pressure Mounts for Samsung to Resolve the Problem Quickly

    Samsung traces the problem with their latest mobile phone devices to battery fault. According to Samsung, the battery issue only occurs in 0.1 percent of the entire Galaxy Note 7 smartphones shipped. However, Samsung management made the decision to recall all the units because their top priority is the safety of their customers.

    A Samsung representative told Fortune that there has been strong demand for the Galaxy Note 7. The company is boosting production of the smartphones to match this demand including the quality control testing of the defective smartphone battery. Samsung is hoping to resolve these issues quickly in time to compete with the release date of the Apple iPhone 7. Bloomberg estimates that Samsung may spend as much as $1 billion to replace the latest shipments of 2.5 million smartphones.