LG Seeking Compensation From Apple Over Canceled MicroLED Apple Watch Project

[MacRumors]

LG is seeking compensation from Apple following the abrupt cancelation of the microLED Apple Watch due to the substantial investments it made in preparation of the project, The Elec reports.

As a result of the device's cancelation, LG Display has apparently been left with substantial sunk costs, including the expense of purchasing 14 U.S. patents related to microLED technology from Taiwan's Ultra Display. The company now faces potential claims from its equipment partners, some of whom had also invested in the project without formal contracts in place. LG also moved equipment from Gumi in Gyeongsangbuk-do to Paju in Gyeonggi-do, secured space for the microLED backplane process, and recruited specialized personnel to form a task force dedicated to the project. Overall, LG reportedly spent hundreds of billions of won to prepare for the microLED Apple Watch.

Apple's decision to cancel the project was reportedly based on concerns about the economic viability of microLED technology for the Apple Watch. Despite its potential advantages—such as brighter displays, improved color accuracy, and better power efficiency compared to existing OLED technology—Apple determined that the production costs associated with microLED were too high to justify its inclusion in the Apple Watch. There were also significant challenges related to the manufacturing process, which would have made it more difficult to produce the displays in the required quantities.

Article Link: LG Seeking Compensation From Apple Over Canceled MicroLED Apple Watch Project

 

[jlc1978]

I suspect there will be some sort of agreement since LG wants Apple as a customer and Apple wants LG to be a viable suppler to keep display costs down due to competition.

 

[rjohnstone]

So, LG invested all of this time and money WITHOUT a signed contract in hand?
Sounds like a poor business decision. Not something Apple should be financially responsible for.

 

[asdfjkl;]

some of whom had also invested in the project without formal contracts in place

Well, that sounds like negligence to me. Why would any company go and make enormous investments without some sort of contract in place?

 

[neuropsychguy]

I feel for LG and the other companies but given that it appears there were not formal contracts ("some of whom had also invested in the project without formal contracts in place"), it's not likely there's much or any legal ground for compensation. Spending all this money and effort without a formal contract is risky business practice at best.

There's also not likely any ethical grounds for compensation. If Apple wants a product but another company (e.g., LG) cannot produce it for expected costs and with hoped for quality and yield, it's not really the fault of the company requesting the product. However, we clearly don't have the full story so it's tough to say either way. I'm not going to say it's LG's fault or Apple's fault. We just don't know enough of the details.

I would be surprised is Apple and LG don't figure something out though. Working together should benefit both companies.

 

[Smittywerben]

Don't Micro LED TVs cost around $150K or something like that? who thought it would be a good idea to put them in a small device with much higher pixel density so early ?

 

[Geoffb9]

It seems all companies want to get money from Apple.

 

[Robert.Walter]

This whole argument will turn on whether LG represented to Apple that it could meet Apples targets and to what extent Apple accepted the liability contingent upon Apple cancelling for any reason other than missed targets.

Seems there was at least a bit of speculative exuberance on the part of LG suppliers and possibly LG itself.

I never signed a contract for which we didn’t have an investment recovery clause in the event of an OEM cancellation.

 

[therunningman]

My guess is that no supplier/manufacturer will ever go into a verbal agreement with Apple in the future. But when plunking down that much capital, LG should have had something signed in advance.

 

[zubikov]

Jobs rolling over in his grave once again. Gone are the days of bold, industry-shaking moves.

It's all about tightening screws, squeezing pennies from suppliers and customers. Apple gave up writing their own AI and has now outsourced it to Open AI without a coherent strategy (unless you count memojis as a strategy for investing tens of billions of dollars). Apple is doing their best to stay average, having their ecosystem do all the heavy lifting. How long is that going to last?

 

[HobeSoundDarryl]

Here we go with a bunch of "no contract: tough loss LG" in favor of Apple Inc. LG probably has 500 contracts with Apple for all kinds of other stuff. There was likely some perception of this moving forward driven by Apple and they were just taking care of a good customer by going a bit out on a limb on this one... with full expectation that that customer wouldn't leave them holding the bag.

Hopefully Apple does the right thing by one of their very important vendors in who knows how many ways. Else, vendor learns an expensive lesson here- makes sure other vendors knows that this client is capable of skipping out on an expensive bill- and then ALL of them demand formal agreements in writing forever after... somewhat complicating Apples execution and even more so many efforts towards secrecy.

"We" always take the Apple side in all things/matters/situations and there's always 2 sides to every story.

 

[Mrkevinfinnerty]

It seems all companies want to get money from Apple.

Oh the horror!

 

[timber]

So, LG invested all of this time and money WITHOUT a signed contract in hand?
Sounds like a poor business decision. Not something Apple should be financially responsible for.

If that is the case they probably valued their previous relation with Apple and decided Apple was worth some leeway.

They won't make the same mistake again.

 

[paulovsouza]

Everyone talking about LG’s negligence, but Apple being a big company I can see them forcing their hand, and Apple knowing they could back out at any time being a plus for them. LG probably relies on Apple, Samsung makes their own display, there’s no competition.

 

[jdmachogg]

Well, that sounds like negligence to me. Why would any company go and make enormous investments without some sort of contract in place?

I've been involved in negotiations with Apple before. They have a long, like, really really long, lead time. Often, they want to see progress and products before committing much.

I'm not taking sides here, I do understand how this happened, being on that side of the table.

 

[vertsix]

So, LG invested all of this time and money WITHOUT a signed contract in hand?
Sounds like a poor business decision. Not something Apple should be financially responsible for.

There was an agreement or contract of sorts. This type of investment doesn't just begin without mutual assurance. Additionally, this happens all the time in engineering with R&D.

Source: am an engineer.

 

[davide_eu]

So, LG invested all of this time and money WITHOUT a signed contract in hand?
Sounds like a poor business decision. Not something Apple should be financially responsible for.

Nobody should trust a$$le (anymore)...

 

[Student of Life]

From a legal standpoint LG could make a case out of promissory estoppel or detrimental reliance. That’s not saying they would win but it’s a sound argument. In reality they both need each other so something will be worked out to both of their favor. Maybe Apple buys some of those patents to offset those cost.

 

[tennisproha]

It seems all companies want to get money from Apple.

It seems all Apple wants is our money.

ftfy

 

[arobert3434]

Didn't LG learn from the example of the sapphire cover glass company that met a similar fate from another canceled upgrade to the Apple watch? Or is the lure of a high-volume Apple contract enough to induce even a company of LG's size to do large investments at risk?

 

[Godspeed8230]

ams Osram should follow suit.

 

[Robert.Walter]

If that is the case they probably valued their previous relation with Apple and decided Apple was worth some leeway.

They won't make the same mistake again.

Shouldn’t have made that mistake in the past.

If the relationship is that good apple would have agreed to a contract for this topic.

 

[Robert.Walter]

Didn't LG learn from the example of the sapphire cover glass company that met a similar fate from another canceled upgrade to the Apple watch? Or is the lure of a high-volume Apple contract enough to induce even a company of LG's size to do large investments at risk?

The sapphire glass company made representations they were far away from being able to meet.

 

[Ramchi]

My guess is that no supplier/manufacturer will ever go into a verbal agreement with Apple in the future. But when plunking down that much capital, LG should have had something signed in advance.

I think LG and Apple probably have entered into a contract. Still, LG and their vendors/partners are said to have not entered into any agreement and proceeded to spend money and start buying equipment, patents etc...LG will most likely spend this compensation on their partners/vendors if they get it from Apple.

 

[mattopotamus]

Didn't LG learn from the example of the sapphire cover glass company that met a similar fate from another canceled upgrade to the Apple watch? Or is the lure of a high-volume Apple contract enough to induce even a company of LG's size to do large investments at risk?

You probably are exactly right. The long term benefits are probably worth the risk.