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Apple 'Likely' to Reimburse Samsung for Missing OLED Display Purchase Targets Due to Poor iPhone 12 Mini Sales

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Apple is likely to reimburse Samsung Display over a shortfall in OLED panel orders owing to lower-than-expected demand for iPhone 12 mini models, according to The Korea Herald.

iphone-12-vs-iphone-12-mini.jpg

Samsung's small OLED shipments dropped globally in January by 9 percent month-on-month to 45 million units, according to market data gathered by Omdia, which pins the decline on sluggish iPhone 12 mini sales. Apple is likely to compensate Samsung for the missed OLED panel purchase targets as a result, an industry source told the Herald:
"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," an industry official said on condition of anonymity.
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Samsung is the sole supplier of the 5.4-inch panel used in the iPhone 12 mini, the smallest model of Apple's 5G-supporting iPhone 12 series.

If the prediction turns out to be accurate, it would be the third time that Apple has had to reimburse Samsung for missing OLED display targets after saying it would buy a certain number of the panels from the South Korean company.

Apple reportedly paid Samsung an estimated $683 million in 2019 and approximately $950 million in 2020 for similarly below-par OLED panel orders.

Samsung remains the world's leading smartphone display panel vendor, and has provided the overwhelming majority of OLED panels for Apple's iPhones over the last few years.

According to Omdia, global OLED panel shipments reached 53 million units in January, and Samsung Display accounted for 85 percent of them.

Despite a barrage of reports this year suggesting lackluster iPhone 12 mini sales, Apple is expected to retain its smallest 5.4-inch iPhone model size in its forthcoming iPhone 13 lineup.

Article Link: Apple 'Likely' to Reimburse Samsung for Missing OLED Display Purchase Targets Due to Poor iPhone 12 Mini Sales
 
Article Link
https://www.macrumors.com/2021/03/23/apple-likely-compensate-samsung-oled-orders/
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Before someone on MR ( as they do every time ) telling how stupid it is for Apple and are now paying penalty.

That is not how it works.

I think this was explained last time n 2019.

You need downpayment or contract to guarantee supply. Otherwise Manufacture will just sell supply to the highest bidder. And you cant just order them and not ship them either because there are storage and logistics problem.

Apple needs to have guarantee in place. To ensure their iPhone are not being hold up, but if you cant full fill those orders, who is going to pay for the empty production line that Samsung has saved for Apple? That is what these payment are for.

And in turns those aren't really penalty either. Apple will received discount on their next order. So the $950 million value will be back to Apple anyway. These are pretty much standard practice in the Supply Chain. ( Unless Samsung doesn't want to do business with Apple any more )

Some would ask Would LG and BOE have those similar terms in place?

May be, may be not. Both LG and BOE have less negotiation power. LG has close to zero Mobile OLED market. BOE are willing to bent over for Apple's order "IF" their quality are good enough. And then they will have to figure out capacity planning themselves. That is why doing business with Apple is both blessing and a curse.
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That is from 2020, I wrote something similar in 2019 and 2018 but I couldn't be bothered to search all the way back to reference.

forums.macrumors.com

Apple Pays Samsung an Estimated $950 Million for Missing OLED Panel Purchase Targets

That is not how it works. I think this was explained last time n 2019. You need downpayment or contract to guarantee supply. Otherwise Manufacture will just sell supply to the highest bidder. And you cant just order them and not ship them either because there are storage and logistics problem...
forums.macrumors.com forums.macrumors.com
 
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dz5b609 said:
This is the problem with listening to small very vocal groups, not just for Apple but for the world. Twitter/Forums/Reddit are not representative for anything.
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It's not like the mini has not sold. Some do want a smaller iPhone, i am one of those, is it really that difficult for a company the size of Apple to offer 3 sizes of phone and keep them up to date annually? Thats all i want.
 
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If you assume that the 2021 mini will sell equally poorly, Apple is paying money for nothing. Would it make sense for Apple to take the displays anyway (more money, but would have displays in their inventory) and reworking the mini into the next gen SE. My feeling is that Apple was going to do this anyway in 2023 or so so this would just bring it forward a few years and get the whole line up onto OLED screens with Face-ID.

Having to pay a compensation fee would lower the effective price of taking the screens (e.g. if the displays are not taken Apple pays $1bn, if Apple buys the displays as planned it costs them $3bn, thus taking the screens effectively costs $2bn as $1bn would be paid anyway).
 
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It's all my fault! I was planning to buy a 12 mini, but my 1st gen iPhone SE is still working like a charm.

Maybe I'll go for iPhone 13 mini, if it has a minijack for my earphones.

I know, I know, it's time to switch to lightning earphones or those fancy "blue tooth" thingies, but I won't be able to use them with my old iPod.

So maybe it's Apple's fault for making indestructible devices.
 
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Possibly the nail in the coffin for sub-5.8" iPhones after this year (unless it becomes an SE eventually). I could see 2022's offerings going to 5.8" and 6.5" (iPhone 13 and iPhone 13 Plus) and 6.1" and 6.7" (iPhone 13 Pro and iPhone 13 Pro Max).

Don't think the 'mini' brand has very wide appeal with iPhones, so making the smaller model just 'iPhone 13' with a slight size bump will help, as with renaming the XR successor to just iPhone 11. Certainly a shame for those who like the smaller size, but I don't think Apple will just tolerate low sales for its flagship product when a different arrangement could bring in more money.
 
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This is what you get for listening to stupid, untalented, but very vocal Youtubers - and this means EVERYONE, even the „big ones“ like MKBHD. They have mostly no idea what they‘re talking about, and are popular just by chance (they were first in the gold rush).

Apple pays waaaaay too much attention to them..
 
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Why pay Samsung for unsold screens when they could just lower the price of the mini and reach their sales goals was my first thought but I guess what they might pay out on screens is less than what they would have to lose in profit by a price cut large enough to stimulate sales significantly. The only price cut on a 12 we are likely to see is when the 13 comes out in September.
 
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Hmm its a shame for small phone fans. I mean personally I bought and mini and returned it. Although I liked the feel in my hand the screen was just too small. I think they should push it up to 5.6 or back to 5.8. Perfect size. I find 6.1 just a tad too big.
 
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WLS said:
Why pay Samsung for unsold screens when they could just lower the price of the mini and reach their sales goals was my first thought but I guess what they might pay out on screens is less than what they would have to lose in profit by a price cut large enough to stimulate sales significantly. The only price cut on a 12 we are likely to see is when the 13 comes out in September.
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This is Apple. There will be a long-term cost-benefit analysis taking place. The risk of cutting the cost of a phone like the mini isn't just the drop in profits and narrowing the profit margin, it's the reputational damage that it can do which is, rightly or wrongly, a serious consideration at Apple. Dropping the HomePod price for instance would have been an option of absolute last resort.

Someone will have run a calculation that suggests that lowering the phone price either still wouldn't result in enough units being shifted, or else that the benefits of doing so wouldn't outweigh the cost of simply repaying Samsung what is owed.
 
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dz5b609 said:
This is the problem with listening to small very vocal groups, not just for Apple but for the world. Twitter/Forums/Reddit are not representative for anything.
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I think 2020 & 2021 are very special years. It is possible that the target group of the iPhone 12 Mini is hesitant to spend the money during the pandemic (when compared to other target groups). I think if iPhone 13 Mini sells below expectations again, Apple should either lower sales expectations or consider eliminating the device. Who knows whether the Mini sells bad or just below expectations.
 
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