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(5th LD) Samsung officially halts production of Galaxy Note 7

All Headlines 20:08 October 11, 2016

(ATTN: RECASTS headline and paras 2-3; ADDS photo)

SEOUL, Oct. 11 (Yonhap) -- Samsung Electronics Co. said Tuesday it is halting the production of the Galaxy Note 7 just 70 days after its launch, signaling the official termination of the Android-based phablet following possible battery problems.

"Although the company controlled supply of the Galaxy Note 7 in an effort to strengthen quality and to further probe into the problems of the Galaxy Note 7, the company officially decided to halt the production of the model after halting the sales," Samsung said in a regulatory filing.

Earlier in the day, the company said it will ask global partners to halt sales and exchanges of the Galaxy Note 7 and advised consumers to immediately stop using the smartphone because of continued safety concerns.

The latest warning came about 10 days after Samsung resumed sales of the new Note 7 following an unprecedented replacement program due to a battery problem.

"We are working with relevant regulatory bodies to investigate the recently reported cases involving the Galaxy Note 7. Because consumers' safety remains our top priority, Samsung will ask all carriers and retail partners globally to stop sales and exchanges of the Galaxy Note 7 while the investigation is taking place," Samsung said in a statement.

"We remain committed to working diligently with appropriate regulatory authorities to take all necessary steps to resolve the situation," Samsung said.

"Consumers with either an original Galaxy Note 7 or replacement Galaxy Note 7 device should power down and stop using the device and take advantage of the remedies available," Samsung said.

Samsung Electronics said it will begin refunding Galaxy Note 7 owners on Thursday, and those who do not wish a full refund can get any other Samsung phone model in exchange.

Those wishing to exchange their Galaxy Note 7s for other Samsung models will also be given a 30,000 won (US$27) coupon they can use to purchase smartphone accessories.

"The company sincerely apologizes for causing worry and discomfort to customers and partners," said a Samsung official, noting that customers should first contact outlets across the country before visiting.

The company said it has officially notified the nation's three mobile carriers -- SK Telecom Co., KT Corp. and LG Uplus Corp. -- of the decision.

Earlier this week, Samsung suspended production of the Galaxy Note 7 amid a series of media reports that some of its replacements have caught fire.

The South Korean tech giant announced the global recall of the controversial handset in early September due to reports of some handsets catching fire while charging. The device first went on sale on Aug. 19.

Samsung said it is working with the U.S. Consumer Product Safety Commission to investigate reported fires involving the new Note 7s.

In a separate statement, Elliot Kaye, chairman of the U.S. safety commission, said the decision by Samsung to stop sales and exchanges of the Note 7 was "the right move."

"No one should have to be concerned their phone will endanger them, their family or their property. Due 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," Kaye said.

"I also appreciate the safety leadership role the wireless carriers and retailers are playing by temporarily stopping the sale of the Note 7 and not providing the Note 7 model as a replacement device," Kaye said.

The Korean Agency for Technology and Standards, a state institution responsible for product safety, also advised consumers to stop using the Note 7s.

The exact cause of the reported fires involving the Note 7s is unknown.

But many analysts agree that Samsung apparently rushed to launch the device to beat Apple's new iPhone, suggesting that quality tests on the Note 7 might have been insufficient.

Lee Seung-woo, an analyst at IBK Securities, said the latest sales stoppage of the Note 7s is expected to dent the earnings of Samsung's smartphone business.

"Samsung Electronics launched the Galaxy Note 7 after skipping over using the name Galaxy Note 6. That was meant to signal an improvement of the device's capabilities, but it looked somewhat hasty," Lee said.

Also on Tuesday, China's state safety regulator said Samsung's Chinese unit will recall 190,984 Note 7s that have been sold in China.

Shares of Samsung Electronics plunged 8.04 percent to close at 1,545,000 won (US$1,378.8).

(END)

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