Apple has been forced to pay Samsung nearly $950 million following smartphone OLED panel order shortcomings in Q2 2020. That's according to recent reports citing DSCC sources and could be among the highest such payments to date. Apple was also forced to make a payment due to similar reasons back in Q2 2019.
However, that earlier payment only rang in at around KRW 900 billion. That's roughly two million US dollars short of the most recent payout at around $746 million by current exchange rates.
For clarity, the payments in question are part of an ongoing supply agreement between Apple and Samsung Display. Samsung provides Apple with the OLED panels used in its iPhones. And Apple effectively agrees to order a predetermined minimum number of panels. The company fell short on orders, resulting in fees owed to Samsung Display.
The jump in the penalty owed over previous years comes amid an ongoing pandemic, which has largely been blamed for dwindling smartphone sales. But it does appear to point to far lower-than-expected iPhone sales. That's despite Apple effectively cornering the global premium smartphone segment in Q1 2020. The company held 57-percent of the premium market — technically the only market segment it competes in.
This Apple payment was reportedly a windfall for Samsung
Now, the payment to Samsung Display from Apple reportedly resulted in a quarterly reporting windfall for the former company. That's because it essentially took an operating loss on device displays and rolled it over into a profit. And that's not a first either.
That's good news for Samsung who, as with almost every other tech business, has suffered significant downturns due to ongoing global health concerns. In fact, Samsung's premium segment offerings have performed particularly poorly this year. On day one, for instance, the company's Samsung Galaxy S20 sold at a rate that was approximately half of that for the Galaxy S10 series.
Its Note series sales aren't expected to do much better.
Part of Samsung's shortcomings may come down to shifting technology
Samsung's shortcomings in the display segment could come down to several factors. Not least of all, setting aside the ongoing health crisis, the company has been shifting direction on the display technology front. It has been making major investments in display panels for televisions, for example, and placing an emphasis on QLED. For LCD offerings, reports have suggested the company is looking to third-party suppliers.
On OLEDs, Samsung has also been looking outside of Samsung Display for smartphone panels.