Apple Faces Samsung’s Penalty of Nearly $1 Billion
According to a report from Display Supply Chain Consultants, Apple made a $950 million payment to Samsung for acquiring fewer OLED displays than required.
Samsung officially mentioned an unspecific amount of “one-time related to its display business” profit in its Q2 guidance. Last month, TheElec reported that Samsung has received approximately $745 from Apple, but a recent report from unknown sources claimed that the payment was “closer to $950 million.”
According to the report, the payment made by Apple has turned an operating loss to an operating profit for display devices. Samsung Display’s revenue guidance dropped by 7% from year to year, yet its operating profit guidance went unexpectedly by 23%.
The same situation occurred last Q2 2019 when Apple faced a penalty for not purchasing Samsun’s OLED displays at the agreed amount. At that time, Apple settled the penalty by rewarding Samsung Display extra orders, which the number of orders would be equal to the debt, however it is unclear how the company is dealing with the penalty at the moment.
Like how it dealt with Samsung’s fine, Apple has agreements with many of its suppliers to minimize purchases. The contract has some a penalty if Apple fails to purchase the agreed amount. One of the plausible reasons why Apple orders fewer OLED panels would be how the pandemic is affecting its supply chain and demand.
By: Kimsreng Lay