According to display analysts at Display Supply Chain Consultants, Apple in the second quarter of 2020 paid Samsung approximately $950 million for not meeting OLED panel purchase goals established in agreements between the two companies.
Samsung last week shared guidance on revenue and operating profit for the second quarter of 2020, which included a one-time gain related to its display business. The one-time payment is believed to be from Apple, caused by Apple purchasing fewer than expected OLED panels for smartphones during the second quarter of the year.
Samsung reported that its estimate of operating profit included a one-time gain related to its display business, according to a report at wsj.com, but did not disclose the amount. Last week theelec.net reported that 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.
During Apple’s third fiscal quarter, or second calendar quarter, many of its retail stores in the United States in other countries around the world were closed for several months, which, along with economic uncertainty, likely had a major impact on sales.
MacDailyNews Take: The terms of the contract have been honored by Apple, as always.
Apple should have had some “force majeure” clauses in their contract.
I have a suspicion should that clause exist, there would be something similar benefiting Samsung should they be unable to meet obligations for providing supply.
As it is, Apple never thought they would be unable to meet purchasing obligations, which possibly led to more favorable terms in their current contract than would be otherwise.
No matter how scummy the supplier!
Apple pays Samsung, yet Samdung still rips off Apple
So Apple pays Samsung a whole lot more for missing shipping projections than Samsung did in aggregate over the patent infringement.
Samsung execs are laughing all the way to the bank.
How does Apple treat their 3rd party vendors (carriers, electronic stores, etc.) if they miss purchase obligations? Apple most likely also ‘laughs all the way to the bank’ enforcing similar clauses in those contracts.
And that’s just for the rounded corners! 🙂
Why not just buy the things as contracted and put them in a warehouse until needed? And if you don’t use them sell ’em to someone else.
In Apple’s case they could afford keeping a large unused parts inventory but in general most companies try to ‘right-size’ for their manufacturing needs. Not only does it cost to store (rent, environment control, management) but I believe there are tax considerations also.
Selling parts inventory probably has tax consequences if not a ‘one-time’ sale type event similar to how garage sales are not really taxed but if you open up a mini-store (e.g. multi-level marketing) in your garage you better have a business license and keep up with taxes on revenue.