iPhone X Sales Collapse Leads To Bitter Row With Samsung, Apple Up For Big Penalties
iPhone X Sales Collapse Leads To Bitter Row With Samsung,
Apple Up For Big Penalties
By David Richards| 23 Jun 2019
A bitter row has erupted between Samsung and Apple who
facing paying out hundreds of millions of dollars in penalty payments after
already paying penalties due to the collapse in sales of their much-heralded
iPhone X which came with an OLED display made by Samsung.
When Apple wanted to take on the top end Samsung Galaxy
smartphones, they engaged archrival Samsung Display to deliver a new OLED
screen.
And because of the forecast numbers which were up to 100
million screens a year Samsung built a brand-new OLED production plant which
was configured to supply Apple with over 100 million OLED display panels
annually.
The new Samsung A3 plant was capable of delivering
105,000 6th generation flexible OLED panels per month and was constructed
‘exclusively for Apple.
Then everything went “pear shaped” claim insiders.
The much-heralded Apple iPhone X failed to sell due to
the premium cost of the device and the fact that the new Samsung range of
smartphones were seen as a better offering with thousands of iPhone owners
choosing to stick with their current model smartphone.
The contract between the two Companies had “penalty
clauses” built in according to sources, which Apple are now trying to get out
of paying as they add up to hundreds of millions. One source told ChannelNews
that one lot of payments has already been paid.
Apple has responded claiming that the supplied OLED
panels were “faulty” which observers claim appear to be a stalling tactic as
they try to negotiate a settlement.
At this stage the issues have not made it to a court
room.
As a result of the slump in forecast sales Samsung had to
wind back their A3 production line to the extent that Samsung was only
producing less than 10% of what Apple forecast.
The drop-in sales of Apple iPhones with an OLED screen coincided
with a fall in demand for smartphones across the boards as well as for Samsung
Galaxy smartphones.
This impacted Samsung Display’s performance with 2018
profits plunging to US$2.26 billion, this was half of the US $4.66 billion
operating profit in 2017.
Recently Apple has started to cuddle up to LG Display
however analysts claim that LG do not have the same production capacity as
Samsung and the OLED panels are “more expensive”.
They have also moved to investing in JDI (Japan Display)
who have been struggling to stay afloat and have been desperate to attract
investors, Apple is set to use this Company to produce LED panels.
“Although Apple requested Samsung Display to extend its
plant believing that it would use about 100 million OLED panels annually,
actual market demand was far lower than Apple’ prediction.” said a Samsung
media executive.
“Samsung Display took a huge blow as a result and
requested a penalty from Apple in accordance with the contract.” they added.
Apple has also suggested putting in place a guarantee for
the supply of panels for other products rather than actually paying a penalty,
Samsung appear to have rejected this.
“It is difficult for us to make information available
regarding our customers.” said Samsung Display.
Apple may be able to avoid a penalty if it commits to
OLED orders for future products, which could be “tablets or notebooks.”
Another industry source said: “It is heard that Apple
made some suggestions such as guaranteeing supply of OLED panels for other
Apple products. Samsung Display was also levied a small penalty due to faulty
performance of few panels that were supplied to Apple and they are looking into
many options as they both have to pay each other a penalty.”
Recent reports have suggested Samsung may already be in
talks with Cupertino over potentially using an OLED display for a revamped
MacBook Pro.
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