Samsung Galaxy Note 7 recall estimated to cost $1billion

Samsung may have to spend as much as $1billion, some £750 million converted, following its decision to replace all of the 2.5 million Note 7 smartphones that have shipped since it went on-sale, Express.co.uk reports, citing estimates compiled by Bloomberg.

Samsung would not confirm the exact figure, but did say that the amount was "heartbreaking".

Around three dozen Galaxy Note 7 devices – or some 0.1 per cent of the entire volume sold – were found to have batteries that caught fire and exploded.

Angry social media users shared photographs of charred smartphones online, complaining the devices had burst into flames while charging.

The timing of the defective phones could not have come at a worse time for Samsung.

The South Korean technology firm was showered in rave reviews for its latest 5.7inch Galaxy Note smartphone, which itself followed the enormously successful Galaxy S7 Edge, a phone that helped to drive share prices to a record last month – lifted quarterly profits to their highest point in the last two years.

Samsung's Note 7 was poised ready to go head-to-head with the Apple iPhone 7, which is expected to launch this week.

Estimates from Credit Suisse Group AG, Daishin Securities Co. and Pelham Smithers Associates set the cost of the recall at around $1billion, some £750 million converted.

Asked about the financial impact of the recall, head of Samsung’s smartphone business, Koh Dong Jin told a press conference in Seoul last week that it was a "heartbreaking amount".

The estimated impact represents less than five per cent of Samsung's projected net income of $20.6 billion this year.

It remains to be seen whether the battery issues have an impact on the brand.

A spokesperson for Samsung last week told Express.co.uk, "Samsung is committed to producing the highest quality products and we take every incident report from our valued customers very seriously.

"In response to recently reported cases of the new Galaxy Note7, we conducted a thorough investigation and found a battery cell issue.

"However, because our customers’ safety is an absolute priority at Samsung, we have stopped sales of the Galaxy Note7."