Galaxy Note 7 recall could cost Samsung a ‘heartbreaking’ $1 billion

Samsung’s most successful smartphone launch quickly turned into its most miserable last week when it announced a worldwide recall of the Galaxy Note 7. The South Korean company has now confirmed that the move will cost a “heartbreaking amount” of money.

Samsung shipped a whopping 2.5 million Galaxy Note 7 handsets since the device made its official debut just two weeks ago, and now it is offering to replace every single one of them following reports that some handsets are exploding while charging.

It has since been confirmed that there have been 35 cases of this problem worldwide. Although Samsung maintains only a small number of devices are at risk, there’s no way to tell which ones are unsafe, so customers have been invited to claim a replacement.

According to estimates compiled by Bloombergthe recall could cost Samsung as much as $1 billion. Samsung won’t confirm this figure, but Koh Dong Jin, head of the company’s smartphone business, revealed it would be a “heartbreaking amount.”

The recall couldn’t have come at a more devastating time for Samsung. The Galaxy Note 7 launched to rave reviews from the tech press, and it was selling incredibly well — far exceeding Samsung’s original sales predictions — ahead of the iPhone 7 launch this month.

Not some Galaxy Note 7 adopters will be keeping a close eye on what Apple has up its sleeve before deciding whether they really want to wait for a new Note to arrive.

While $1 billion might be a significant sum of cash, it represents less than 5 percent of Samsung’s projected net income of 23 trillion won ($20.6 billion) for 2016. It will put a dent in the company’s bottom line, then, but the sting probably won’t last too long.

Many believe Samsung has eliminated any long-term fallout by dealing with this problem quickly. Rather than simply ignoring it, the recall shows the company’s commitment to quality, according to “industry observers” cited by The Korea Herald.