In one word: Below-expected iPhone sales will have disappointed Apple, but Samsung reaped the benefits. Not selling enough phones meant that Cupertino ordered fewer OLED panels than stipulated in his contract with Samsung. As such, Apple had to pay its rival a fine of around $ 950 million.
In last month’s earnings guide, Samsung predicted its operating profit increased 23 percent in the three months ending June, and that was despite a 7.4 percent annual sales decline. The Korean giant noted that the figures included a one-time gain in its display business.
While Samsung never disclosed which customer made the payment or the amount, Apple is believed to have delivered around $ 750 million to Samsung Display after purchasing fewer OLED panels than contracted ones. But according to a DSCC report, that figure was actually “closer to $ 950 million.”
“Apple’s payment likely turned what would otherwise have been an operating loss for display devices into an operating profit,” the report read.
This is not the first time that Apple has failed to honor its OLED contract with Samsung Display. The same thing happened in the second quarter of last year after low sales during the 2018 holiday season, resulting in a fine of around $ 683 million. As 9To5Mac pointed out, Apple is unlikely to have paid in cash in that case; instead, he would have placed additional orders to the extent that Samsung’s profit equaled the fine. It is unclear if that was also the case this year.
The Covid-19 pandemic has affected smartphone manufacturing and demand, and sales are expected to hit a ten-year low in 2020. We’ll find out how store and factory closings hit Apple during its earnings call on 30. of July.
