Apple paid $950 million to Samsung- we tell you why

(Image credit: Samsung)

Apple has reportedly paid a penalty of around $950 million to its archrival Samsung. Okay, to be precise, Samsung Display. And the reason? Well, Apple did not apparently purchase enough OLED panels to meet its contractual obligations.

Samsung has released its guidance for revenues and operating profit for the 2nd quarter of 2020, beating most expectations for operating profits driven by strong memory demand in semiconductors, and a "one-time payment from Apple in Display."

As per a report by Display Supply Chain Consultants, "Samsung Display is believed to have received KRW 900 billion from Apple for purchasing fewer OLED smartphone panels than required, but DSCC sources suggest that the payment is closer to US$950 million. The Apple payment likely turned what otherwise would have been an operating loss for display devices into an operating profit."

Samsung had obtained a larger chunk of the panel orders required for the iPhone lineup during 2020. LG Display and BOE Technology were sharing the smaller parts. 

LG Display was contracted to supply 20 million OLEd panels for the iPhone 12 series this year while Samsung Display got to produce 55 million units.

Not the first time for Apple

Apple in April reported a revenue of $58.3 billion, up from $58 billion in the year-ago quarter. Apple's third quarter results are to be out on July 30. A clearer picture on the payments to Samsung would emerge in that.

But this is not the first time that Apple has made such a payment to Samsung. It shelled out $683 million to Samsung in July 2019 after failing to meet OLED display purchase targets due to poor sales in China and other parts of the world in 2018.

If the report of penalty payment is confirmed then it would ineveitably mean that Apple didn't meet the projected iPhone sales. The reason for this is of course obvious: Most of its shops across the globe were closed due to the lockdown entailed by the Covid-19 pandemic.

Samsung too is expected to release its full financial report towards the last week of July.

Source: Display Supply Chain Consultants

Balakumar K
Senior Editor

Over three decades as a journalist covering current affairs, politics, sports and now technology. Former Editor of News Today, writer of humour columns across publications and a hardcore cricket and cinema enthusiast. He writes about technology trends and suggest movies and shows to watch on OTT platforms.