Apple pays a $ 770 million display penalty to Samsung and "does not trust Korean suppliers"



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Samsung posted surprisingly good results last week in the second quarter, given the drop in demand in many covered sectors, and we now know why. You remember rumors that Apple would have ordered 100 million OLED panels for which it would have signed a contract, but many of them have never been used because of the lukewarm demand cycle of the company. ; iPhone?

Apple has signed a contract for 100 million screens for about 70 dollars, making the iPhone the most expensive part. At that time, Apple was hoping that its unique Face ID technology would be absorbed by iOS users around the world. It has pushed up the price of the first phone with the latter, the iPhone X, to unprecedented heights.

Fast forward to 2019, and not only has the iPhone X not been performing as well as expected in the market, but the following iPhone-equipped OLED displays are not selling as well as hoped for various reasons. Samsung has built these dedicated Apple production lines, but the panel orders for iPhone have never multiplied, as people have been holding their handsets longer and have not been impressed by Apple 's offerings. OLED that go far beyond their predecessors loaded LCD screen.

Fortunately, Samsung has good contract lawyers who have managed to rule out the language of compensation in case of missing order. Korean media reports that the mysterious amount of 900 billion won (about $ 765.5 million) appearing as a lump sum income in Samsung Display's revenue is precisely the amount of compensation offered by Apple to Samsung.

On the one hand, Apple has already paid hundreds of millions of dollars to Samsung to make up for the shortfall that has drastically reduced Samsung Display's profits, from $ 4.9 billion in 2017 to $ 2.3 billion of dollars last year. On the other hand, Apple reportedly proposed to order OLED panels for other products than the iPhone, including iPads and Macs, in order to increase production, said a "responsible of the industry ". Of course, the two do not exclude each other, Apple may also have simply pre-paid orders to come.

Whatever the case may be, Samsung Display is now richer by $ 770 million, and the amount could very well come from Apple, whose pivot to OLED panels is not going as planned. In another interesting Korean report, Apple is apparently tired of local suppliers and is working with a broker able to vouch for LG Electronics' equipment and hardware production center.

The center is now in full swing and is going into an explanation mode whereby it is not necessary to "bribe" suppliers to suggest them to customers, but simply to pay fees for their services. According to an LG executive, local suppliers would have had a hard time working on Apple devices, for example, if they did not have them:

While the LG Center Executive gives as an example the fact that its supplier brokerage department adds value by exposing Korean companies to customers and world-class production practices, the Apple bit has captured our attention for another reason.

Samsung's near-monopoly on high-end small OLED displays is so powerful that Apple, apparently opposed to direct meetings with suppliers and signing contracts with them, had to sit down and do exactly that he did not want to be left behind screen developments. Alternatively, Apple's declared aversion to contracts with Korean suppliers could come precisely from the one signed with Samsung which now requires it to part with the colossal sum of $ 770 million for a capacity reserved but underutilized.

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