Samsung Galaxy Fold screen 'malfunction' raises spectre of Note 7 fiasco

The malfunctions raised the specter of Samsung's doomed Galaxy Note 7 phone three years ago, forcing it to recall and cancel sales of the model

Samsung Electronics Co Ltd said it has received "a few" reports of damage to the displays of samples of its upcoming foldable smartphone, raising the prospect of a less-then-smooth entry for the splashy $1,980 handset.

The Galaxy Fold, on sale from April 26 in the United States, resembles a conventional smartphone but opens like a book to reveal a second display the size of a small tablet at 7.3 inches (18.5 cm). The design, matched by Huawei Technologies Co Ltd's Mate X, was hailed as the future in a field that has seen few surprises since Apple Inc's iPhone in 2007.

Yet ahead of the launch, journalists supplied with review samples reported malfunctions after only a day or two of use.

"We will thoroughly inspect these units ... to determine the cause of the matter," Samsung said in a statement.

Shares of the company closed down 3.1 percent, while the broader market was down 1.43 percent.

The malfunctions raised the specter of Samsung's doomed Galaxy Note 7 phone three years ago. Battery and design flaws in the Note 7 resulted in some units catching fire or exploding, forcing Samsung to recall and cancel sales of the model.

The recall wiped out nearly all profit of Samsung's mobile division in the third quarter of 2016.

With the Fold, analysts said malfunctions from the first batch of a test model were of little surprise. Moreover, the handset's in-folding design is likely to be less durable than Huawei's out-folding approach, they said.

"In-folding is more difficult to make than out-folding, as it adds higher pressure to screens, which people have worried about," said analyst Park Sung-soon at BNK Securities.

DO NOT REMOVE

Technology journalists took to Twitter on Wednesday to report instances of the screen either cracking or flickering.

Bloomberg reporter Mark Gurman tweeted: "The screen on my Galaxy Fold review unit is completely broken and unusable just two days in. Hard to know if this is widespread or not."

Gurman removed a plastic layer on the screen that was not meant to be removed and the phone malfunctioned afterwards, according to his tweets.

A wrapper around the device featured "ATTENTION" in uppercase and warned not remove the layer, showed a tweet from another sample recipient.

Samsung on Thursday said removing the protective layer might result in damage, and that it would clearly inform customers of the issue.

Dieter Bohn, executive editor of The Verge, said a "small bulge" appeared on the crease of the phone screen, which appeared to be something pressing from underneath the screen. Bohn said Samsung replaced his test phone but did not offer an explanation for the problem.

"It is very troubling," Bohn told Reuters, adding that he did not remove the protective layer.

CNBC.com tech editor Steve Kovach tweeted a video of half of his phone's screen flickering after using it for just a day.

HIGH DEMAND

Samsung has said it plans to make at least 1 million Fold handsets, versus the total 300 million phones it produces annually. It has closed Fold pre-orders due to "high demand".

On Thursday, the firm told Reuters there was no change to its release schedule following the malfunction reports.

"I think as time goes on its yield rate will improve, and foldables that customers have in hand will be much better," said analyst Lee Kyu-ha at NH Investment & Securities. "But I don't know if Samsung can completely fix the problem about screens."