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

[LiveM]

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.

Acts of God are just one of a suite of force majeure events. Epidemics are explicitly included in most such clauses, as is civil disruption.

 

[MacBH928]

So much for the logistics genius! /s

I don't see the problem, its not like the panels will evaporate, they will just install them in future products. iPhone SE2, iPod touch, whatever...Also if Samsung did not actually manufacture the displays then maybe they can take the money in as credit for Apple and use it to pay for displays built in the future.

A contract at work.

I am surprised Apple didn’t try to negotiate (read “dictate”) downward with a conditional future offer.

Apple doesn't care, because Apple is about to announce....Apple Screens /s

 

[V_Man]

I wonder how many people refuse to use the iPad Pro because the LCD is "boring."

Where did he say that.
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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.

And there goes any point you had. Samesung. 🙄🙄🙄🙄

this forum would be much better if there was no more of this childlessness. Same with the political nicknames.

 

[Wyvernspirit]

Plot Twist, they sent it as iTunes Gift Cards

 

[ksec]

Finally. It only took until page 3. You win the internet today. The rest of you amateur supply chain managers can take the day off.

Yes... Especially when we have been through this already in 2019 with the exact same situation.

It saddens me Internet hasn't make any more people smarter or well informed. It is quite the opposite. Headlines and Clickbait article with little knowledge and analysis are causing all the problems.

As Steve has once said.

We have descended into a nation of bloggers.

 

[Brien]

Article image is hilarious. Good work whoever.

 

[melodyfo1974]

Samsung sounds like a home contractor, when you give us $10K we will start work.

In reality, money was probably owed at certain interval dates. Apple is still going to get their the screens, just pushed back a few weeks/months. iPhone 12

 

[michaelbushwvu]

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.

Hence why they are dropping the charger from the phone. Let's drop the charger, sell the phone for the same price, and then spin it as being green and saving the planet. Nobody will notice...

 

[ani4ani]

Yeah I’m sure Samsung would rather sell a $50 display than a $1,300 Galaxy.

Samsung would rather sell a $50 display (and mem

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.

The reality is there would have been volume pricing, I.e. a guaranteed volume attracts a guaranteed price per item. If the volumes are not met, the price per unit increases to the next volume break.

 

[Stevie jobz 2.0]

Not sure how this news will benefit Samsung "fans" in any way. hahahaha

Same way that apple fans take pride, when sale numbers are announced...

 

[826317]

Same way that apple fans take pride, when sale numbers are announced...

First off, I highly doubt non-Apple employees/execs take pride in those numbers, secondly, if they did, that would make more sense than thinking that an extra $1 billion in Samsung's pocket is going to directly benefit the consumer.

 

[Stevie jobz 2.0]

First off, I highly doubt non-Apple employees/execs take pride in those numbers, secondly, if they did, that would make more sense than thinking that an extra $1 billion in Samsung's pocket is going to directly benefit the consumer.

Firstly, have you not been here when sales numbers are announced, or adoption rates of the latest OS.. Jeez, its like someones First born has won at school sports day!!

Secondly, it an was apple fan being glib about Samsung fans getting benefit...

 

[Abazigal]

Yeah I’m sure Samsung would rather sell a $50 display than a $1,300 Galaxy.

The phone part of the company is separate from the components part and they operate independently for most part. The latter is not going to miss his earnings targets just to give the former an edge over the competition.

 

[amartinez1660]

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.

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.

Thanks for these.
Completely overlooked the fact that filling up with stuff that’s not going to be used is also a waste of time, transportation, storage, potential future disposal costs, etc, etc, etc... probably better to just chop it all at the source if not meeting forecasts.

 

[I7guy]

Probably because their screens are/were considered the best at the time the contract was signed.

You don't think Samsung would bend-over for a couple of billion of Apples' $$$, especially given their less than stellar earnings? So in my opinion, there was no "upper hand". One had money and wanted product, the other wanted money and could manufacture product. No win-lose...only win-win.

 

[Baymowe335]

It would be like trying to dictate to Qualcomm. Apple ended up paying $4.5B and counting.

Devastating to Apple for sure. It has certainly stood in their way as they march toward a $2T company. 😂

 

[31 Flavas]

Well, heres why Apple is ditching the pone power brick.
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Unbelievable! Samsung is killing Apple's margins! Apple better do something quick and improve margins or shareholders will revolt! Go back to LCDs if they have to! I don't care. Just bring your display margins down!

They’ll just clip the Ear Buds and 5w trickle charger for the phone.

 

[Brandon916]

You don't think Samsung would bend-over for a couple of billion of Apples' $$$, especially given their less than stellar earnings? So in my opinion, there was no "upper hand". One had money and wanted product, the other wanted money and could manufacture product. No win-lose...only win-win.

Def a lose lose for both. Samsung had to build new equipment to handle the requested load. When it wasn't met, that 1B was probaby just enough to pay for the cost of building those out and material sitting in a warehouse. Apple loses out on money. I'm sure no side wanted this.