” The Apple payment likely turned what otherwise would have been an operating loss for screen devices into an operating revenue,” the report describes. Profits guidance was down 7% year-on-year for Samsung Display, however running revenue guidance was up 23%, and which is much higher analyst expectations.
Apple has arrangements with a lot of its providers to make a minimum purchase, most likely to achieve lower costs per unit. Contracts typically state that a charge will use if Apple stops working to hit that minimum purchase. This year, Apples supply chain and demand were both impacted by COVID-19, which could discuss what led the company to order fewer OLED panels than at first expected.
Samsung noted in its Q2 assistance release that the operating profit for Q2 2020 included a “one-time gain associated to its display service,” however it did not consist of the quantity. TheElec reported last month that Samsung got around $745 million from Apple, but todays report from the DSCC states and points out unnamed sources that Apple made a payment of “closer to $950 million.”
If this scenario sounds familiar, its since something similar occurred in Q2 of 2019 when Apple likewise dealt with a charge from Samsung for not purchasing OLED displays at the agreed level. As we reported at the time, it was unlikely that Apple settled the debt in cash, however rather awarded Samsung Display additional orders to the point where the revenue equates to the penalty due. Whether that is what happened this year is uncertain.
Apple has apparently made another payment to Samsung for selling too couple of iPhones. According to a new report from Display Supply Chain Consultants, Apple made a one-time payment of $950 million to Samsung for acquiring less OLED iPhone displays than needed.
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If this scenario sounds familiar, its since something similar taken place in Q2 of 2019 when Apple likewise dealt with a charge from Samsung for not purchasing OLED screens at the concurred level. As we reported at the time, it was not likely that Apple settled the debt in money, but rather granted Samsung Display additional orders to the point where the revenue equals the penalty due. Apple has agreements with many of its suppliers to make a minimum purchase, most likely to achieve lower costs per system.
