Nokia Oyj offered to replace as many as 46 million cellphone batteries made by Matsushita Electric Industrial Co as some may overheat, in what would be the largest consumer electronics recall.
Nokia, the world's biggest cellphone maker, said there were about 100 cases of overheating globally, with no reports of serious injury or damage to property.
The affected Nokia-branded BL-5C batteries were made by Matsushita Battery Industrial Co between December 2005 and November last year, Espoo, Finland-based Nokia said in a statement today.
Matsushita Electric will discuss replacement costs with Nokia, Akira Kadota, a spokesman in Tokyo for the Osaka-based company, said by telephone.
The latest incident builds on a series of recalls in the past year that has drawn attention to quality at Japan's electronics makers.
In August last year, Tokyo-based Sony Corp began replacing 9.6 million notebook computer batteries in what was then the biggest recall in consumer electronics history.
A rechargeable cellphone battery may cost about ?300 to ?450 (US$2.54 to US$3.80) to produce, said Haruo Sato, an analyst at Tokai Tokyo Securities Co, who covers companies that include battery maker NEC Tokin Corp and Softbank Corp, Japan's third-biggest cellphone operator.
Based on Sato's estimate, Matsushita may incur expenses of at least ?13.8 billion (US$117 million).
Shares of Nokia fell as much as 31 euro cents, or 1.4 percent, to 22.32 euros, and traded at 22.39 euros at 12:17pm in Helsinki.
Before today, the stock had gained 46 percent this year.
Matsushita shares closed unchanged at ?2,120 on the Tokyo Stock Exchange prior to Nokia's announcement.
"The supplier is responsible for quality," said Arja Suominen, a Nokia spokeswoman in Helsinki.
It was too early to estimate the potential cost or how many batteries would eventually be replaced, Suominen said.
Nokia said some of the BL-5C batteries may overheat because of a short circuit while they are being charged.
Consumers with the batteries can ask for replacements, Nokia said.
The company sold 101 million cellphones in the second quarter, a 29 percent increase from a year earlier.
In Japan, Nokia charges ?6,600 for a battery for its E61 smart phone, and ?3,300 for all other models, according to the company's Japanese Web site.
Nokia batteries are priced at US$24.95 to US$59.95 in the US, the US Web site showed.