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Note 7 recall estimated to cost Samsung $1 billion

Samsung may spend as much as $1 billion USD to replace all of the 2.5 million Note 7 smartphones it recalled last week.

That’s according to an estimate by Bloomberg. To put that amount in perspective, it represents less than 5 percent of Samsung’s $20.6 billion projected net income for the year.

Indeed, for Samsung, the damage to its reputation is probably much harder to swallow than the actual dollar amount — though the company did say the number was “heartbreaking.” With the new iPhone set to be unveiled tomorrow, the recall could not have at a worse time.

More practically, when it does make its way back to markets across the world, the Note 7 will not ship with one of the company’s own batteries. Prior to the recall, about 70 percent of Note 7s were powered by Samsung SDI batteries, which were responsible for the 30 or so phones that went up in flames. In markets where Samsung did not recall the Note 7, the smartphone was powered by batteries supplied by Chinese manufacturer ATL. According to reports from local Korean media, Samsung will temporarily stop sourcing batteries from subsidiary Samsung SDI in favour of ones made by ATL.

[source]Bloomberg[/source][via]9to5Google[/via]

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