Samsung Shares Drop over FAA Warning on Using Galaxy Note 7 on Planes

As reported by the Wall Street Journal, investors wiped more than $10 billion off Samsung Electronics Co.’s market value today after U.S. air-safety regulators took the unusual step of singling out the company’s Galaxy Note 7 smartphone as a potential airborne fire hazard.

In Seoul, shares of the South Korean tech titan closed at 1.575 million won ($1,432), down 3.9%.

The stock had been holding up relatively well despite safety concerns about the Galaxy Note 7, the latest addition to the company’s phone lineup.

Samsung last week recalled 2.5 million of the waterproof, iris-scanning smartphones in 10 countries following reports of fires caused by faulty batteries.

The U.S. Federal Aviation Administration on Thursday warned passengers not to use or charge their Galaxy Note 7s on planes and not to stow them in checked bags - a warning matched by Europe’s air-safety regulator on Friday.

Airlines admitted the guidelines would be tough to enforce, but U.S. carriers are expected to start warning passengers before boarding and during the pre-flight safety briefing not to use the phones.

Other carriers, including Qantas Airways, Virgin Australia, and Singapore Airlines, are already instructing against their use.

Samsung UK Statement Explains Exploding Battery Fault
Samsung has issued a statement for the British market explaining that it is replacing all customer’s current Galaxy Note 7 devices and has stopped sales of new ones because of the risk of an exploding battery.

The company’s statement explains that as at the start of September, it was aware of thirty-five cases around the world. The majority of these have been in South Korea or North America with one report from Taiwan. Since the 1st of September we have seen other cases, but these are not mentioned in the press release.

Samsung explain that they are voluntarily replacing devices with a new one over the coming weeks and customers need to call them for more information. This, the press release states is because Samsung place customer safety as their absolute priority

Samsung’s UK press release highlights some of the communications issues with being such a large business. Samsung’s story is a variant of the existing story, but there is one important difference: Samsung have explained what is causing the battery to explode.

Their statement explains that a “very rare manufacturing process error” was causing an anode-to-cathode contact. A short circuit if you will. In the context of battery manufacturing over the world this is a rare event, but not it seems for the Samsung Galaxy Note 7. In the same press release, Samsung do not confirm the battery supplier involved but state that they use a number of suppliers and they are working with all of them.

Of course, during Samsung’s investigation of the exploding Galaxy Note 7 devices, it will be painfully obvious to the manufacturer that had built the battery but it seems Samsung do not want to name and shame the battery supplier, at least officially to the UK market.

It’s also interesting that Samsung have included a number of questions and answers at the bottom of their document and when asked if this were a recall, the company explained: “Although this is isolated to a battery cell issue, we are prioritizing the safety of our customers first so, we are voluntarily replacing Galaxy Note 7 devices with a new one.”

Related: Doubling the Battery Power of Consumer Electronics