No end in sight for Samsung woes as Note 7 production halts

seoul - Top US and Australian carriers also suspended sales or exchanges of Note 7s

Samsung Electronics suspended production of its flagship Galaxy Note 7 smartphones, a source said on Monday, after reports of fires in replacement devices added to the tech giant's worst ever recall crisis.

Top US and Australian carriers also suspended sales or exchanges of Note 7s, while major airlines reiterated bans on passengers using the phones, after smoke from a replacement device forced the evacuation of a passenger plane in the United States last week.

Fires in phones that were meant to replace devices that had been recalled because of their propensity to explode would be a disaster for the world's largest smartphone maker.

"If the Note 7 is allowed to continue, it could lead to the single greatest act of brand self-destruction in the history of modern technology," said Eric Schiffer, brand strategy expert and chairman of Reputation Management Consultants. "Samsung needs to take a giant write-down and cast the Note 7 to the engineering hall of shame next to the Ford Pinto."

In a regulatory filing, Samsung said it was "adjusting" shipments of Note 7s to allow for inspections and stronger quality control due to some devices catching fire.

Samsung told Reuters earlier on Monday it was investigating reports of "heat damage issues" and would take immediate action to fix any problems in line with measures approved by the US Consumer Product Safety Commission.

Samsung shares, which have rebounded after an initial sell-off on the recall, closed down 1.5 per cent, compared with a 0.2 per cent rise for the broader market.

"I think the cleanest thing to do is to give up on the Note 7," said HDC Asset Management fund manager Park Jung-hoon, whose fund owns Samsung shares.

"What's scary is that this is causing people to repeatedly doubt Samsung's fundamental capabilities, so it's important for Samsung to get past this issue quickly."

Major airlines, air regulators and airport authorities reiterated bans on passengers using the phones, saying Note 7s should not be powered up or charged on board.

A South Korean government agency said it was monitoring reports of the fires and warned that the recalled Note 7 devices should not be used or charged inside airplanes.

Mobile carriers also took action on Monday. AT&T, the No 2 US wireless carrier, said it would stop issuing replacement Note 7s and would let customers with a recalled Note 7 exchange that device for another Samsung smartphone or other smartphone of their choice.

No 3 wireless carrier T-Mobile US said it was temporarily halting sales of new Note 7s as well as exchanges while Samsung investigated "multiple reports of issues" with its flagship device.

T-Mobile offered customers who brought in their Note 7s a $25 credit on their phone bill. - Reuters