CBJ — Samsung Electronics has permanently suspended production of its Galaxy Note 7 smartphone, dealing a huge blow to its reputation and outlook after failing to resolve safety concerns.

Samsung announced the recall of 2.5 million Note 7s in early September following numerous reports of the phones catching fire and has now pulled the plug on the expensive device in what could be one of the costliest product safety failures in tech history.

The decision to scrap the Note 7 came after fresh reports of fires in replacement devices prompted new warnings from regulators, phone carriers and airlines.

“(We) have decided to halt production and sales of the Galaxy Note 7 in order to consider our consumers’ safety first and foremost,” the South Korean firm said in a filing to the Seoul stock exchange.

Samsung had already asked all global carriers to stop sales of the Note 7s and the exchange of original devices for replacements, while it worked with regulators to investigate the problem. The company is offering to exchange Note 7s for other products or refund them.

Samsung’s decision to pull Note 7s off the shelves not only raises fresh doubts about the firm’s quality control but could result in huge financial costs not to mention a hit to its reputation.

Analysts say a permanent end to Note 7 sales could cost Samsung up to US$17 billion and tarnish its other phone products in the minds of consumers and carriers.

The South Korean firm did not comment on whether it had identified the cause of the fires in the replacement devices, although officials in Seoul said it was looking at several possibilities including the batteries.

Samsung Canada

Samsung Canada issued a statement late Monday asking all retail outlets to stop sales and exchanges of the Galaxy Note 7 while the investigation is taking place.

The company, based in Mississauga, Ont., says Canadian consumers with either an original Galaxy Note 7 or replacement Galaxy Note 7 device should power down and stop using the device.

The electronics firm says further details, including a full refund at place of purchase, will be announced shortly.

For more information, Canadian consumers can contact 1-800-SAMSUNG.

@CanBizJournal