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Samsung: total Note 7 recall costs now $5 billion, cue 'significant' quality assurance changes

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By Daniel Petrov

Updated: Oct 14, 2016, 7:59 AM

Samsung: total Note 7 recall costs now $5 billion, cue 'significant' quality assurance changes

Apart from the direct cost of the Note 7 recall, which Samsung estimated on Wednesday to result in about a $2.3 billion slash in profit for the precious quarter, the company now issued another earnings guidance update, looking forward to the recall loss estimates for Q4 2016 and Q1 2017.

This current quarter it expects the discontinued sales to impact the bottom line in the mid-2 billion, with another billion added for the January-March period. This amounts to about a $5 billion writeoff in total for the double recall, or roughly two grand per Note 7 phablet. Granted, that's probably a top line estimate so that Samsung can insure itself against any unforeseen expenses, but it's still a pretty costly endeavor, wiping out two thirds of this quarter's operating profit in one fell swoop.

Therefore, Samsung is apparently determined not to let this happen again, and announced that it "will focus on enhancing product safety for consumers by making significant changes in its quality assurance processes." Given the rumors that it is planning to announce a foldable phone by March, those QA changes better happen fast and furious, as we can only imagine how hard would this one be to manufacture compared even to the "symmetrical" Note 7 design. Meanwhile, Samsung said that it will try to fill the void left by Note 7 by ramping up production of the S7 and S7 edge models.

source: Samsung

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Daniel, a devoted tech writer at PhoneArena from 2010 to 2025, has been engrossed in mobile technology since the Windows Mobile era. His expertise spans mobile hardware, software, and carrier networks, and he's keenly interested in the future of digital health, car connectivity, and 5G. Beyond his professional pursuits, Daniel finds balance in travel, reading, and exploring new tech innovations, while contemplating the ethical and privacy implications of our digital future.