Shares of Samsung Electronics dropped more than 3 percent on Thursday after multiple accounts emerged of its cutting-edge folding phone breaking ahead of the device's retail launch.

The phone, named the Galaxy Fold and priced at $1,980, has only been given to gadget reviewers so far, but several people have reported that their screens appear to be disconnecting and permanently flashing on or off.

Samsung started taking pre-orders for the Galaxy Fold last weekend, but quickly ran out of availability, suggesting supply is constrained at least until its retail launch.

The wider technology sector in South Korea also saw declines on the day, with shares of SK Hynix and LG Electronics declining 1.25 percent and 2.5 percent, respectively.

Samsung's stock decline was related to the early reports of the Galaxy Fold breaking, said Daniel Yoo, head of global strategy and research at Kiwoom Securities. On top of that, investors were also responding to concerns about Samsung's part in the roll out of the next generation 5G wireless standard, he added.

"With Qualcomm and Apple deal, expectation for 5G was very high," Yoo said.