Samsung reportedly slaps Apple with almost $1.3 billion penalty

Samsung reportedly slaps Apple with almost $1.3 billion penalty

Samsung reportedly penalized Apple up to AU$1.3 billion for not ordering enough OLED screens from the Korean company.

Apple lives and breathes the outsourced production of the parts of its gadgets. They are perfect in their design team, but they still rely on third-party suppliers for production. Coincidentally, Apple sources one of the most vital parts of their iPhones from Samsung.

Apple relies on the Korean company’s production of the screens to deliver great displays on the iPhones. Attached to that reliance is the expectation from Samsung that Apple will keep the demand high. Unfortunately, the iPhone maker is underdelivering on that promise.

Apple penalized by Samsung up to $1.3 billion

Display Supply Chain Consultants reported that Samsung lost almost 7% year-on-year in its profits. This could easily be attributed to the ongoing pandemic around the world. While the net profits turned sour for the company, they posted a 23% gain in operating profits. This was brought about by an undisclosed one-time payment to the company.

Samsung didn’t disclose which company paid the amount, but Display Supply Chain Consultants believe that it was Apple’s penalty payment. The actual commitment of the Cupertino-based in terms of units of OLED screens ordered was also not disclosed. However, based on the $1.3 billion penalties slapped on Apple, it must have under-ordered a great sum.

Cut in iPhone 12 production

The company stated last January a 10% decline in the iPhone productions between January to March. It told its suppliers that the weakening Chinese market brought about the decision.

A few months after, Apple was again hit hardly by the pandemic that destroyed economies around the world. The company further announced that it would slash off 20% of its production of iPhones. It hasn’t been made clear why the production was decreased. The global pandemic has weakened purchasing confidence among buyers. As such, it could be a big reason why the company is setting low expectations.

iPhone 12 excitement

There is a building excitement around the iPhone 12 launch. Apple is expected to launch the phone online, but it will not stop its followers to buy the product. Due to the ongoing pandemic around the world, pundits are expecting the company to open pre-orders for the new phones.

The plan would be to release a phone that can be bought right away. All other models will come a month later after pre-orders. This way, Apple can mask the production problems it had to face because of COVID-19. Also, it can prolong the stake in the phone for months.

Image from Ravi Sharma/ Unsplash

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