Samsung Display could be paid by Apple over lower than anticipated OLED panel orders due to slow iPhone 12 mini sales, according to industry observers, an event that has happened a few times before.
Apple enters into agreements with its supply chain partners to secure optimal pricing for components. Sometimes, this involves contracts where Apple guarantees a minimum number of units to be ordered, and occasionally it cannot meet those requirements.
Anonymous industry observers speaking to The Korea Herald claim that such a situation has arisen in Apple’s relationship with Samsung Display.
It is inferred that Samsung’s reduced global OLED shipments for January of 45 million units was down 9% month-to-month, with slower sales of the iPhone 12 mini blamed for the reduction. Samsung is the only supplier of the 5.4-inch OLED panel used in that particular model.
Due to this presumed shortfall, the observers believe Apple could have to provide Samsung with compensation for failing to achieve the minimum expected sales for that model.
“It is uncertain whether Apple would pay a penalty to Samsung Display, but considering its contract history and sluggish sales of the iPhone 12 mini, it is likely that Apple will compensate Samsung Display,” said an anonymous source.
Paying compensation to Samsung Display for a lack of orders isn’t new to Apple, as it has done so at least twice in the past.
In 2019, Apple paid an estimated $684 million in compensation to Samsung Display over lower-than-anticipated OLED panel orders. The same situation arose in 2020, with the payment on that occasion thought to be in the region of $950 million.
The value of compensation this time around wasn’t speculated, but it is likely to be quite high given previous payments.