It’s no secret that Samsung has recalled one million Note7 units this week, but just what is the cost of the Note7 recall?
Why recall the Note7?
Samsung decided to recall one million handsets as 35 units were reporting to have caught fire. Mathematicians amongst you will note that is about 0.0014%. With safety being a priority, such a risk was too great for Samsung who opted to recall and relaunch.
What is the cost of the Note7 recall for Samsung?
It doesn’t come cheap. We can’t question the fact it was the right thing to do, but it’s a hefty bill for Samsung. Analysts reckon they are looking at a cost of around one billion Dollars between recalling the phones, re-tests, and repairs. Samsung’s head of business, Koh Dong Jin, referred to as ‘a heartbreaking amount’. It is still unknown who the providers of the batteries are for Samsung’s models, but we can assume that they will be sharing in the cost of the whole debacle.
Samsung has already dropped Samsung SDI who supply 70% of batteries, while the rest are supplied by Amperex Technology. This blunder carries a one billion Dollar price tag. A significant cost, but it still only represents a bit less than 5% of the companies projected net income this year. Samsung may have an insurance policy to cover this blunder, but no information on this has been released.
If there is anyone that will benefit from all of this, it’s Apple. They will be unveiling the new iPhone 7 on Wednesday and will bask in the misfortunes of their most biggest rivals.
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