In a way, Samsung does not get the money back from Apple. Apple pay to Samsung SDI/Display not to Samsung Electronics.
Samsung SDI/Display is a separate subsidiary, but Samsung Electronic/Samsung Group owns Samsung SDI/Display
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Apple Pays Samsung an Estimated $950 Million for Missing OLED Panel Purchase Targets
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In a way, Samsung does not get the money back from Apple. Apple pay to Samsung SDI/Display not to Samsung Electronics.
Samsung SDI/Display is a separate subsidiary, but Samsung Electronic/Samsung Group owns Samsung SDI/Display
Read my reply above. And the screen cost less than a $100. So in unit volume it is a lot more.
Anybody here know the significance of that ?
NO ONE on Wall Street has yet figured it out !
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I believe AAPL pays ~$65 per screen (the benefit of a very large order).
This is incorrect. Apple has a certain bar they want manufacturers to meet. Manufacturers have to use their own technology to reach Apple's bar.
I think that's their plan for microLED, but ultimately they will want to in-house very component.
Im not a Samsung fan (but a Samsung phone owner presently), but clearly receiving $950M is better than not receiving it and perhaps that money can be invested in R&D which might otherwise not have taken place...perhaps into better OLED displays to fit to Samsung phones in the future? Are really that intrigued?
I recently upgraded from a LCD iPhone to a OLED one. While the blacker blacks are nice, I didn't notice any dramatic improvements over what I had previously. I personally wouldn't mind going back to a LCD phone if I find a good option down the road.
It’s more likely that they budgeted for a certain minimum amount of revenue from Apple, which they’ve only met thanks to this payment. They’re still in a worse position than they would have been without the pandemic hurting sales, so there’s little chance of them ramping up R&D spending. The original glib comment doesn’t really make any sense - neither Samesung nor Apple is “winning” in this situation.
That seems crazy to pay it that way then.
Thanks for better numbers, that's why I used the word "guess" a few times there...
its freakish how companies can toss around that kind of money
Nothing compared to federal reserve money printer going "BRRR!"
It never ceases to amaze me how many “experts” the Internet has.
So many of them this thread saying that Apple should have done this or that or the other thing.
I’m sure the legal and commercial minds at the one of the world’s largest and most profitable companies know more about negotiating a multi-billion dollar contract than the vast majority of the rest of us.
So many of them this thread saying that Apple should have done this or that or the other thing.
I’m sure the legal and commercial minds at the one of the world’s largest and most profitable companies know more about negotiating a multi-billion dollar contract than the vast majority of the rest of us.
Not saying its boring, its just that you have an option with the iPhone, so not taking the latter would be boring. You however don't have a choice with the iPad Pro, which brings me to my next point: Taking an iPad Air over a iPad Pro would be boring since the air is 60 HZ versus the Pro's 120 HZ.
Your point is invalid for that reason. The higher end will always be more interesting and fun.
The alternative would be to lower the price of those iPhones and Apple isn't going to even think about that.
Genuinely surprised there was no clause in there for circumstances so dire they could affect sales. For example, why didn't it say, "We will buy XXXXX panels for sure, otherwise we'll pay you a penalty of XXXXX no doubt, unless of course there's a global pandemic or something that causes us not to need so many. I mean, let's be real here..." lol
I mean...isn't that what some insurances do???
I mean...isn't that what some insurances do???
I would be more than curious to indeed understand how this works.
I mean, does even Apple pay that Billion dollars and receives back a billion dollar worth of screen panels?
If someone in the know has any insight, I’m all ears.
Why? You getting any of it? Nope. Also they'd have have more cash IF they had made the Targets. Durp.
From Samsung’s POV, they received an order to make X displays, they want assurance that Apple will purchase X displays. What Apple does with them is not Samsung’s business.
Such a clause would probably serve to increase the cost per display, since there is now a chance that Apple won’t have to buy anything, and this will simply be factored into the final price.
I suspect Apple may not want to have anything to do with those displays. They don’t need the extra supply right now, and storing those displays in a warehouse somewhere just ends up incurring extra costs. Apple is just going to write it off as an added expense and move on.
Hardly anyone has 10 bit monitors. Generally only graphic designers because they are so expensive. No phone would ever go to 10bit LCD. Makes zero sense.
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MicroLED blacks still isn't better then OLED. It does get brighter though.
You can be sure it’s a two way street. Samsung would have had hefty penalties if they were unable to meet the demand.
So this sort of production line require massive amount of setup and tooling etc. So Orders Clauses are used all the time.
All Rough Estimates and figures here on out.
Ok So say they were Contracted to buy $12B of screens say 200 Million screens
Samsung will have geared up to produce that many over time. Supply chain in place, people, Factories, Transport etc. To be made and delivered week by week.
Apple Targets are low ( Say 150 million ) they only need so lower the order triggering the under order clause where they probably pay about 25% on the under delivery which would be about $950 Million of the $4 Billion
Note - the displays will not have been made yet. Apple are all about Just in time production. So no warehousing of parts. 100K Screens are delivered at beginning of week 1 to Foxconn and 100K iPhones Plop out full made and boxed at the end of week one.
The Negative - Obvs Losing $950 Million.
The Positive - Save $3 Billion Dollars.
The Alternative Pay the Full amount - Warehouse 50 Million screens with Associated Transport / Storage / Security.
It's more a compensation for lost profits and investments to meet that high target, it could well be a zero-sum game for Samsung.
Apple likely has an annual purchasing quota, so buying more than they need this year would just mean they'd have too many panels on order next year unless they saw an increase in iPhone sales to cover the excess. This is unlikely considering how iPhone sales have generally stabilized (and there would also be all the other components Apple would need to make those phones beyond just the panels).
If they had used LCD instead of OLED, the "spec hounds" would be baying all over this forum how the iPhone X / 11 / 12 was "crap".
Pretty much.
Apple uses their own optimization of Samsung's panels through a proprietary precision display calibration. The result is the best OLED smartphone panels available and they are exclusive to Apple. Hence why Apple and Samsung have this minimum purchase clause.