Apple pays Samsung US$950 million in fines

Sina Technology News, July 14, morning news, Beijing time, according to the latest report of the consulting company Display Supply Chain Consultants, due to the lower than expected iPhone sales, the number of OLED displays that Apple purchased from Samsung has not reached the previous agreement. An additional cost of US$950 million was paid.

Apple pays Samsung US$950 million in fines

Samsung stated in its second-quarter performance outlook that operating profit for the second quarter of 2020 includes “one-time gains related to the display business”, but this fee paid by Apple is not included. TheElec reported last month that Samsung received approximately $745 million from Apple, but the DSCC report today quoted sources as saying that Apple paid “close to $950 million.”

The report explains: “The fee paid by Apple is likely to help Samsung Display’s business change from operating loss to operating profit.” Samsung Display’s revenue outlook fell by 7% year-on-year, but its operating profit outlook rose by 23%, far beyond Analysts expected.

Previously, a similar situation occurred in the second quarter of 2019. At that time, Apple was fined by Samsung for not purchasing OLED displays in accordance with the agreed amount. According to reports at the time, it is unlikely that Apple will pay off its debts directly in cash, but will provide additional orders to Samsung Display until the profits generated can offset the fines. It is not yet clear whether the same is true this year.

Apple has signed minimum purchase agreements with many suppliers to obtain lower unit prices. Normally, if the minimum purchase amount is not reached, then the penalties in the contract will be triggered. This year, Apple’s supply chain and market demand have been affected by the new crown virus epidemic, which may also be the reason why Apple’s purchase of OLED panels is less than expected.

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