Apple reportedly paid Samsung almost $1 billion for missing OLED display targets

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Samsung wants to follow Apple in building a giant services business
Apple had to make a sizable payment to Samsung.
Photo: Mathieu Turle/Unsplash CC

Apple reportedly paid out $950 million to Samsung in the April through June quarter for failing to buy a large enough quantity of OLED displays.

This follows a similar situation during Q2 in 2019 when Apple also made a large payout to Samsung for the same reason.

The website DSCC writes that, for Samsung: “The Apple payment likely turned what otherwise would have been an operating loss for display devices into an operating profit.” Samsung is due to publish its full financial reports later this month.

This suggests that Apple did not produce as many iPhones as hoped for during the quarter. Apple may shed some light on this during its upcoming quarterly earnings call later this month.

Apple’s agreement with Samsung

Apple’s payments to Samsung are owed as part of a deal agreed between the two companies. Apple agreed to buy a certain quantity of OLED screens per year. In the event that it does not, it has to pay Samsung anyway.

Samsung’s hold on Apple’s OLED business for the iPhone could diminish somewhat in the next year. According to a rumor, Chinese manufacturer BOE Technology Group could make OLED panels for the iPhone, starting in 2021. This has not yet been confirmed.

This year, Apple for the first time will include OLED displays on all its new iPhones. The iPhone 12 will feature four models in total, all of which have OLED displays. This differs from previous years in which Apple included a mix of OLED and LCD handsets.