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Galaxy Note 7 cancellation set to cost Samsung £2.5bn

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Samsung expects its operating profit to take a £2.5 billion hit between now and early 2017, after it was forced to cancel production of the faulty Galaxy Note 7 smartphone.

The news comes just a day after the company issued a separate profit warning for the three months from June to September. The Galaxy Note 7 was launched in early August.

However, Samsung has not said whether it expects the debacle, which saw Note 7 phones overheat and explode, to affect its performance in the medium term.

The company is due to launch the Galaxy S8 smartphone ahead of February’s Mobile World Congress event in Barcelona.

The decision to permanently halt production of the Galaxy Note 7 comes at an especially bad time, given that rivals Google and Apple have new, well received phones on the market.

Samsung is also facing major competition from Chinese companies such as Huawei.

Samsung this week issued recall kits comprising thermally insulated boxes and gloves to prevent consumers from being injured when packing up their smartphone.

It has also begun offering financial sweeteners to customers in the US and Korea to get them to buy a different smartphone.



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