Apple owes Samsung $170+ M due to decline in iPhone Sales

Due to the falling sales of iPhone this year, Apple was not able to meet it's agreement with Samsung Displays. The company promised an order of 100 million OLED Displays but was unable to actually buy 100 million displays. This makes the fine owed to Samsung by Apple up-to $170 Million.

apple samsung iphone falling sales

Apple reportedly owes Samsung a fine of $170 Million due to falling sales of iPhone. As we know Samsung Displays are the best ones in the market, good quality as well as the timely delivery. Apple agreed to use Samsung Display for the iPhone X family.

ZDNet explains:

“According to ETNews, an outlet with a good track record when it comes to insider Apple news, Apple reportedly may owe Samsung Display “hundreds of billions of won” in penalties for not buying OLED displays at the agreed level […]

The penalty goes back to Apple’s insistence that Samsung Display build a facility to exclusively manufacture OLED displays for the iPhone. Apple had told Samsung Display it would need 100 million OLED iPhone displays a year. But a slump in iPhone sales had a knock-on effect for Samsung Display, which saw its operating profits halve in a year, falling from 5.7 trillion won in 2017 to 2.62 trillion won in 2018.”

100 million won sums up-to $86M and multiplying that with hundreds is around $170M or possibly more than that. We do not have the exact amount with us right now, but we shall gain more information on the issue later in time.

How did the problem start?

Apple entered into an agreement with Samsung Displays, for which Samsung Displays set-up an exclusive production unit. The unit is meant only to produce displays for iPhone. Apple agreed on a deal for a 100 Million OLED iPhone displays a year. But due to the fall in the iPhone sales, the agreement was not completed.

Due to the lower quantity ordered for the iPhone displays, the profits of Samsung Displays have fallen drastically. The company is also not ready to pay the fine in cash and rather has a different plan. Apple plans to place order for the iPhone displays until the profits of Samsung Displays meet the expected amount. This is not a bad idea, but let us see how the company plans to sell that huge number of iPhones.

This is a confusing situation, where-in the Cupertino giant has to pay millions for selling fewer iPhones. There are rising tensions between USA and China, which can adversely affect Apple and it’s sales & pricing. Which is why the company is also planning to move out some production from China.

Apple and Samsung share a very complicated relationship. Samsung is a supplier, partner and competitor to Apple. Let us now see how Apple plans to resolve this conflict with Samsung Displays.

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