Smartphone screens have been greatly improved, thanks to OLED technology. Samsung solely holds this OLED market. Other companies need to pay Samsung for using OLED displays on their smartphones. Samsung also holds the right to form a contract where their customers need to buy a minimum number of OLED panels. The customers need to pay Samsung a penalty when the orders are less than the minimum amount.
Apple’s Shift to OLED panels
Previously, all the major iPhone models used to come typically on IPS LCD screens. However, the upcoming iPhone models will be shifting to OLED technology. As a result, Apple formed a contract with Samsung to acquire the OLED panels. However, the quantity of iPhones to be produced is not enough to meet the minimum purchase limit of Samsung.
As a result, Apple is obliged to pay a penalty amount to Samsung in the course of purchasing the OLED panels. As of now, reports state that the penalty amount is nearly 1 Billion Dollars. That is quite a hefty amount. However, given the conditions, Apple probably has no choice but to pay the amount.
Apple’s History of Paying Penalties to Samsung
This is not the first time Apple has to pay a penalty amount to Samsung. Reportedly, Apple had paid a fine amounting to 684 Million Dollars to Samsung in the second quarter of 2019. The reason was the same. Apple had failed to order the minimum quantity of Samsung owned panels back then as well.
As for the current penalty, initially, the amount was 745 Million Dollars. However, with recent updates, Apple’s purchase of OLED panels in the second quarter of 2020 is even less than expected. Hence, the amount increased to 950 Million Dollars and around 1 Billion Dollars by now. The display division of Samsung was supposedly on a loss. This amount from Apple will reportedly turn that loss into profit by a considerable margin.
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