Makes sense now why Apple is pursuing using a cheaper quality OLED supplier like BOE plus it's easier to throw them under the bus in these situations when purchase quotas aren't met.
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Apple Pays Samsung an Estimated $950 Million for Missing OLED Panel Purchase Targets
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Without seeing the details of the contract it isn't "pretty clear". Apple has a reputation for fiercely negotiating contracts. If the contract for Samsung screens is anything like the F500 manufacturing contracts I've been involved with, Samsung gave Apple a cut-rate price on screens but required a guarantee of a specific high quantity of units. There was most likely an escape clause for Apple in the event that Apple didn't actually purchase that many units. The price of the escape clause is LESS than the purchase of the units.
they don't get anything back. they get compensated for all the time wasted on producing panels that no one will end up using, since they're custom made for Apple...
I don't think it's that simple.
The panels haven't been produced yet, which is why the under-purchase penalty is cheaper than actually buying the panels.
Regardless of whether the extra displays are produced or not, the knowledge gained from engineering the displays will be used for the next generation of OLEDs.
If apple can't sell enough iPhones (made with Samsung OLED screens), how does switching suppliers help sell more iPhones?
And their eyes as well.Their batteries sure can tell the difference.
Ok, so that's almost a billion dollars, for zero displays.
So, on a "per display" basis, that's.... divide by zero.... Owie!
So, on a "per display" basis, that's.... divide by zero.... Owie!
I doubt it, stock came within $0.18 of breaking $400 today. I am a happy stockholder!
Another newbie manufacturing and business expert!
Maybe the thinking is cheaper quality and cost savings is passed on to the customers. So, instead of paying $999 it'll be $949.
Quality 10bit LCDs are more expensive than OLED, that's the whole point why manufacturers have switched to OLED. It gives them better image than run of the mill LCD for lesser cost than high end LCD and it's better for overall packaging cause they are thinner and have less components.
Everything else such as OLED battery savings, peak brightness is nothing but marketing talk. Pentile OLED has less subpixels and bigger gap between subpixels than RGBW LCD so they are not even comparable in resolution. It takes Sony Xperia 1 II "4K" Pentile OLED panel to properly display 1080p with all of it's RGB.
Mobile panels don't get any better than Sharp's IGZO but they are super pricey and thus why they are only available on Sharp's flaghsips.
Everything else such as OLED battery savings, peak brightness is nothing but marketing talk. Pentile OLED has less subpixels and bigger gap between subpixels than RGBW LCD so they are not even comparable in resolution. It takes Sony Xperia 1 II "4K" Pentile OLED panel to properly display 1080p with all of it's RGB.
Mobile panels don't get any better than Sharp's IGZO but they are super pricey and thus why they are only available on Sharp's flaghsips.
This contract for buying the panels is more importantly also a contract for reserving the manufacturing capacity for the panels. Remember the Google Pixle 2’s LG OLED panel issues because Apple basically bought out Samsung’s manufacturing capacity for the iPhone X that year? The fine is a small price for Apple to pay for quality panels produced at large enough quantities when they need it.
In this thread are a ton of people who have no idea how supply chains, logistics, or even contracts work...clearly.
That's false, go to Best Buy and you will see the difference between an iPhone 11 with LCD and an iPhone 11 Pro with OLED. The difference is night and day. OLED makes you want to use the phone, it isn't boring.
I wonder how many people refuse to use the iPad Pro because the LCD is "boring."
I'm just curious how this can be only OLED. The only Apple devices with OLED are iPhone 11 Pro, Pro Max, and apple watch. I think the watch is produced by a different manufactured. So at $950M, if the screens cost $200 each, that would mean Apple was 4.75M short of sales. But wouldn't Apple be better off simply buying those extra screens and having them in inventory? So perhaps instead of paying full price for reduced orders, Apple pays a fraction of the price of the screen as a penalty. That would mean that Apple was likely 9-12M phones short.
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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Even if Apple in-houses its displays. it will still outsource the manufacturing. For example. The A-13 bionic is designed by Apple and manufactured by TSMC. TSMC can never sell that chip to anyone else. It is an Apple designed, Apple patented technology. But TSMC manufacturers it. In a way Apple's displays are already in-house. Even if Samsung or LG manufacturers them, Apple displays have certain color reproduction qualities and technologies that are never there in the manufacturer's own consumer products.