Selling fewer iPhones doesn’t just mean a decrease in profit; Apple recently paid Samsung $950 million for buying fewer OLED iPhone displays than promised.
Apple’s penalty fee turns Samsung’s operating loss into profit
In a report published by Display Supply Chain Consultants (DSCC), Samsung revealed its revenues and operating profit for the second quarter of 2020, which is largely contributed by strong demand in semiconductors and also the penalty fee Apple had to pay. DSCC suggested that Apple’s payment was the main reason why display devices became an operating profit instead of a loss.
Apple also penalised in 2019
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. 9to5mac pointed out that Apple has agreements that allow it to purchase components for a lower price per unit, but they’ll have to make a minimum purchase in return.
It’s likely that Apple could not sell as many iPhones this year due to the whole COVID-19 situation. The pandemic has also increased the likelihood of the iPhone 12 delay.