During defrost, it is common for a large cloud of water vapor to appear around the outdoor unit. It is often mistaken for smoke.
What is happening
Ice melts on the heated heat exchanger, and part of the water evaporates or forms visible moisture in the cold outdoor air.
When it is normal
When it appears only during or immediately after defrost and is not accompanied by a burning smell or an electrical alarm.
When it requires inspection
If there is an actual burning odor, unusual noise, or electrical malfunction, the phenomenon should not simply be attributed to water vapor.