The admission is a major blow for Samsung and comes just days before rival Apple is expected to unveil a new iPhone. After struggling for a few years, Samsung saw some improvement in sales as it released new models with sleek new curved screens and features such as wireless charging. The recall, which involve 2.5 million phones already manufactured, is one of the largest ever for the smartphone industry.
People who own the device, which retails at around $850 in the United States, will receive a new one "over the coming weeks," the company said, although it remains unclear when the phones will show up again on store shelves.
Ramon Llamas, research manager for analyst firm IDC's mobile phone team, said the company is doing the right thing by being proactive. But he expects consumer confidence will ultimately rest on how quickly Samsung is able to track down and mitigate the specific source of the problem.
"Even seeing just one device flame up is one case too many -- 35 cases is 35 cases too many," he said. "So I think consumers will be cautious until they know more."
Samsung is investigating its supply chain to nail down the problem's source, according to the statement. Koh Dong-jin, president of Samsung’s mobile business, apologized for the inconvenience in a press conference in Seoul, South Korea.
“There was a tiny problem in the manufacturing process, so it was very difficult to figure out,” Koh told reporters, according to the Associated Press. “It will cost us so much it makes my heart ache. Nevertheless, the reason we made this decision is because what is most important is customer safety.”
Samsung is the largest maker of phones featuring Google's Android mobile operating system. According to Gartner Research, 22 percent of the mobile devices sold around the world in the second quarter of 2016 were made by Samsung; 13 percent were produced by Apple.
But the Note 7's flameout could reinforce consumer perceptions that Apple makes a higher quality product, according to Jeffrey Hammond, vice president and principal analyst at Forrester Research.
Still, he said, the Note incident is more likely to be a black eye than a mortal wound to Samsung's mobile business. "Because each of these two hardware manufacturers get a new bite at the apple -- so to speak -- every year, every stumble has the potential to be short-lived as long as they don't alienate their customers," Hammond said.
Not all previous Note 7 buyers may want their free replacements. South Korean high school teacher Park Soo-Jung said that her Note 7 burst into flame, forcing her to flee her bedroom, according to the AP.
“If the exploded phone had burned near my head, I would not have been able to write this post,” she said in a popular online forum Thursday, the AP reported. She included a photo of the burnt smartphone.
Park said she is not sure she wants to get another Galaxy Note 7 after losing all of her personal data in the incident, the AP reported.