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Seems pretty clear that they pay less per missed purchase than for actually getting the screens, otherwise they would do what you suggested.
Well, I'm sure they paid less. But they received nothing in return. What I'm saying, is instead of spending $950mm and getting nothing in return, it seems like it'd be smarter to pay $1.5bn, $2bn, or whatever the price was to get screens you can at least sell later and recoup the cost on.

So you think Apple can just tell Samsung to manufacture 50 million panels in a quarter , and then say , naa i just need 25 million! you can keep the other 25 million!
That isn't what I said. I said that Apple should've bought the displays anyway, then just use them as they continue to manufacture phones. Just because they missed the current production target doesn't mean that they'll stop making phones tomorrow. They're going to need iPhone XS, XS Max, 11 Pro, etc. for at least another year, so they could just buy those displays and use them as they need them. It just seems like a waste of money to pay Samsung to not sell you something, then later on pay them again when you need those displays next quarter, next year, etc.
 
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It's crazy that Apple entered into a contract to either pay for buying the panels...or pay for not buying the panels.

Seems like it'd make a lot more sense to buy the panels either way, and just use them as needed. They'll be selling iPhone XS, XS Max, 11 Pro, etc. for years to come. Might as well spend the money on something tangible that you can eventually make your money back on.

I don't think it works like that. Probably a part of their business is working on the "just in time" business model. Also it's not like Tim Cook could have stored the displays in cardboard boxes in his garage. These type of industrial giants work on different models than small stores.

It's also crazy that Samsung would sell parts to their competitor but they probably analyzed the situation and decided that Apple could be able to source the displays someplace else so a slice of apple pie is better than no slice.

This sounds like really bad news for us, the Apple customers because Apple will want to get that money back somehow. Just like it decided to increase the phone price when sales dropped it could decide to increase the phone prices to cover this loss. 950 million dollars divided by 80 million phones means almost $12. So Apple could feel entitled to add $20 to each phone co cover this loss.
 
I don't think it works like that. Probably a part of their business is working on the "just in time" business model. Also it's not like Tim Cook could have stored the displays in cardboard boxes in his garage. These type of industrial giants work on different models than small stores.

It's also crazy that Samsung would sell parts to their competitor but they probably analyzed the situation and decided that Apple could be able to source the displays someplace else so a slice of apple pie is better than no slice.

This sounds like really bad news for us, the Apple customers because Apple will want to get that money back somehow. Just like it decided to increase the phone price when sales dropped it could decide to increase the phone prices to cover this loss. 950 million dollars divided by 80 million phones means almost $12. So Apple could feel entitled to add $20 to each phone co cover this loss.

I like the way you think. Apple should hire you.
 
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It's crazy that Apple entered into a contract to either pay for buying the panels...or pay for not buying the panels.

Seems like it'd make a lot more sense to buy the panels either way, and just use them as needed. They'll be selling iPhone XS, XS Max, 11 Pro, etc. for years to come. Might as well spend the money on something tangible that you can eventually make your money back on.
Contracts with take or pay clauses are quite common across many industries (energy for example), the buyer likes low prices but the seller also likes certainty aka a predictable cash flow.

Contracts are two way streets.
 
I think the the Q2 results for a lot of companies are going to be a bloodbath, Apple included. Thanks COVID-19!


Bloodbath, very likely, divide 950 million by the estimated price of the display, that number multiplied by revenue per phone will be part of the revenue lost.
Loss (Actually less profit/revenue) will be greater, Apple sells more than iPhones.



I have a feeling apple will in-house it's own displays!

Huh, what does that even mean, as in, Apple will make their own Displays, guess what, Apple manufactures nothing, it's all outsourced.
 
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That $539 mil lawsuit victory over Samsung for copying iPhone, now seems rather insignificant and trivial.

And oh before you feel bad for Apple, just realize that even with this $950 payout, they’re still making 30-40% margins on the iPhone.
 
Well, I'm sure they paid less. But they received nothing in return. What I'm saying, is instead of spending $950mm and getting nothing in return, it seems like it'd be smarter to pay $1.5bn, $2bn, or whatever the price was to get screens you can at least sell later and recoup the cost on.

OLED prices have dropped dramatically in the last couple years with LG and BOE in the fight.

The popular Xiaomi Mi A3 has a 6.1" OLED with in-screen fingerprint and triple rear camera. It sells for $169.

It's less expensive to pay the Samsung penalty and renegotiate or buy from another vendor.
 
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No "act of God" clause?
there's no act of god clause in there?! insurance companies have been using that BS for years...
The terms have to be mutually agreeable. Samsung and Apple have equal negotiating power.

A consumer takes whatever contract the company can shove down their throats, unless laws and regulations force those companies to do otherwise.
 
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Hey … I'm also pretty upset about those missing OLED panel purchase targets. So what do I get?
 
It's crazy that Apple entered into a contract to either pay for buying the panels...or pay for not buying the panels.

Seems like it'd make a lot more sense to buy the panels either way, and just use them as needed. They'll be selling iPhone XS, XS Max, 11 Pro, etc. for years to come. Might as well spend the money on something tangible that you can eventually make your money back on.

I don't think it was only $950-million in panels that they were supposed to get, I'm guessing it was more like $5-billion in panels (or $10 billion, totally guessing) as Apple had them block out that factory time to make the panels. Kind of like you reserved a banquet hall and didn't show up (so you don't get your deposit back).

Someone mentioned some better numbers below and so I'm blocking these out (you can still read it if you want).
 
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I don't think it works like that. Probably a part of their business is working on the "just in time" business model. Also it's not like Tim Cook could have stored the displays in cardboard boxes in his garage. These type of industrial giants work on different models than small stores.

I agree. Tim Cook is all about the supply chain, and sitting on parts that won't be used soon (or worse may never be used) goes against his core business tenets.

According to other Mac Rumors stories, Apple agreed to purchase 55 million OLED screens from Samsung. It's speculated that this was at $100/OLED. $950 million is 9.5 million OLEDs, so Apple must have missed their target by that much or more to be paying the penalty.
 
It would be like trying to dictate to Qualcomm. Apple ended up paying $4.5B and counting.
Apple rolled Qualcomm lol. That 4.5B was billions less than they would have paid if they hadn’t decided to show Qualcomm who’s boss. But this is the wrong thread for that.
 
I don't think it was only $950-million in panels that they were supposed to get, I'm guessing it was more like $5-billion in panels (or $10 billion, totally guessing) as Apple had them block out that factory time to make the panels. Kind of like you reserved a banquet hall and didn't show up (so you don't get your deposit back).

It was $950 million. The estimated cost of each iPhone X panel is $110. Or roughly 8.6 million display panels. Apple sold about 60 million iPhone X during the 10 month period between 2017-2018.

$5 billion is way off the mark. That would be 45 million units of iPhone X panels.
 
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A contract at work.

I am surprised Apple didn’t try to negotiate (read “dictate”) downward with a conditional future offer.
I'm sure they did that's why they only paid less than $1 billion
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Pandemics aren't acts of God. Earthquakes, fires, tornadoes, etc., would qualify (and who knows what the contract even says?), but a pandemic likely isn't included and wouldn't qualify as an act of God/force majeure in most jurisdictions.
But wouldnt Samsung's output be impacted by pandemic? If both parties cannot fulfill either side of the agreement then there's that
 
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