Apple currently has to pay Samsung Display almost a billion dollars in a penalty for failing to secure a certain amount of supplies of flexible OLED panels for its new iPhones, falling short of the contract. In other words, Samsung Display is penalizingApple for not buying enough iPhone displays. Samsung essentially has a monopoly in the mobile OLED panel market. That’s is why Apple had no choice but to source panels from Samsung Display. Apple has agreements with Samsung that allow it to purchase display components for a lower price per unit, but they’ll have to make a minimum purchase in return. But 2020 happened, and sales collapsed, which prevented the company from reaching that minimum order target. As a result, Samsung Display now wants Apple to pay the penalty for missing its minimum order quantity. This is not the first time Apple had to pay a penalty fee to Samsung. In Q2 2019, Apple was also charged for purchasing fewer OLED displays than agreed. This isn’t merely a case of Samsung being greedy. Samsung invested millions in redesigning manufacturing plants specifically to meet Apple’s expected needs.
Since Apple sells hundreds of millions of iPhones each year, so you understand the scale we are talking about here. With Apple not meeting the required order quantity, It doesn’t seem fair for Samsung to make those investments for nothing. Now I’m seeing many people, particularly apple fans, saying that 1 billion dollars are a pocket change for Apple. I agree that Apple makes a lot of money, even more than Samsung, but 1 billion dollars is not pocket change by any means, not even for Apple. That SAME “pocket change” of ONE BILLION dollars was the purchase price of the entire Intel 5G modem division or about 1/3 of BEATS’ purchasing price by Dre. A billion-dollar is an AWFUL amount of money to lose on a breach of the Agreement Period.