Shares of Samsung Electronics fell sharply on Tuesday after the company confirmed reports that it had halted production of its flagship Galaxy Note7 smartphone, just launched this summer.
The move came after several replacement phones reportedly smoldered or caught fire.
Shares fell 8 percent in the Korean market.
Samsung had been working with the U.S. Consumer Product Safety Commission on a voluntary recall and replacement program, spurred by reports that dozens of the new devices had burst into flames due to faulty lithium-ion batteries.
The Samsung brand, which has enjoyed a longstanding reputation for quality, likely will take a beating, as the recall and subsequent halt of sales expose something seriously amiss in the production and quality control process at the company.
"This is a disaster that keeps on growing for Samsung and their brand," observed wireless analyst Jeff Kagan.
"This problem should never have occurred. The devices should have been tested thoroughly, and this problem should have been found before it hit the market," he told the E-Commerce Times.
While Samsung has other mobile phones and other devices in its product line, the damage has spilled over to some of those other devices as well, Kagan noted. Some consumers have lost trust in the overall brand.
"Other companies have been dethroned for less than this," he said.
There's a perception -- based on anecdotal evidence and analyst forecasts -- that Samsung has been losing market share to Apple, which happened to release its top-of-the-line iPhone 7 within weeks of the Galaxy Note7 release.
Samsung was the market leader for mobile phones worldwide during the first half of the year, with 22.8 percent of the market compared to Apple's 13.8 percent, according to market share data from Gartner analyst Tuong Nguyen.
Courtesy of EcommerceTimes
