Samsung Display

Apple may need to compensate Samsung for unfulfilled iPhone OLED orders—again!

Apple could be on the hook for missing contractual purchasing obligations concerning OLED panels for iPhones due to lower-than-expected sales of the iPhone 12 mini.

STORY HIGHLIGHTS:

Apple couldn’t fulfill previously-contracted OLED orders. This is blamed on sluggish iPhone 12 mini sales. Another proof that folks want larger phones.

Apple could pay a penalty to Samsung

A report from The Korea Herald hints that Apple may be unable to fulfill its previously agreed-upon purchasing order volume for Samsung-built OLED panels. The report suggests that no middle ground could be found between Apple and its chief OLED supplier, suggesting the iPhone maker would need to compensate Samsung's display-making arm.

Samsung Display’s worldwide small OLED shipments in January dropped nine percent month-to-month to 45 million units, according to market researcher Omdia, which added that the decline is apparently prompted by sluggish sales of Apple’s iPhone 12 mini.

Recent reports claim Apple slashed its planned iPhone production targets for the first half of 2021 by twenty percent, with poor iPhone 12 mini responsible for the majority of the cuts.

Industry observers are now predicting that Apple may once again have to pay Samsung a hefty penalty for not meeting the minimum order quantity.

Samsung Display is the sole supplier of 5.4-inch OLED panels for the iPhone 12 mini.

Apple has ordered a certain number of 5.4-inch OLED panels for the iPhone 12 mini. It's no secret that the iPhone 12 mini hasn't met Apple's internal expectations in terms of sales, thereby prompting the company to order fewer OLED panels for the device from Samsung.

And as a result of that, Apple may now need to compensate its rival.

It wouldn't be the first time

This is hardly the first time the Cupertino tech giant has been punished financially for missing its previously-established component purchase targets.

Back in 2019, Samsung was paid a cool $638 million by Apple to compensate the Galaxy maker for lower-than-contracted orders for the iPhone's OLED panels. The following year, the Cupertino firm reportedly paid Samsung Display a whopping $950 million for failing to meet its OLED panel purchase targets. As Apple is a just-in-time operation, it's crucial that its leadership correctly estimates demand in order to avoid being punished by its suppliers like that.

https://www.youtube.com/watch?v=7L_vCxAFyOI

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OLED panels are notoriously difficult and expensive to produce in mass quantity. That's why OLED panel suppliers, of which Samsung Display is definitely the leader, define strict purchase order guarantees in their multi-year agreements with clients like Apple. It's no surprise that those agreements typically include clauses covering penalties for any unfulfilled orders.

Samsung received $683 million from Apple for unfilled orders of iPhone OLED panels

As we previously reported, Apple is on the hook for missing contractual purchasing obligations concerning Samsung-built OLED display panels bound for iPhones. According to Samsung's earrings guidance released Friday, the Galaxy maker has actually received a cool $638 million from the Cupertino firm during the June quarter after Apple couldn't fulfill its previously agreed-upon purchasing order volume and no middle ground could be found.

Video: Samsung’s “unbreakable” OLED panel subjected to a beating with a rubber mallet

Samsung Display last week announced a new type of OLED panel that the South Korean display maker says is virtually “unbreakable”. To illustrate the point, they released an interesting video showing a sheet of flexible OLED panel withstanding some heavy hammering.

The new panel is verified by Underwriters Laboratories, an official testing company for the Occupational Safety and Health Administration of the United States Department of Labor.

Samsung may use it in Note 9, which will be announced on August 9.

The way this new flexible OLED panel has been realized is by leveraging an unbreakable substrate with a fortified plastic window securely adhered to it, as opposed to having a glass-covered window like you see on today's screens which often breaks when severely impacted.

Here's that reliability test video.

https://www.youtube.com/watch?v=m_innzQWrAE

Underwriters Laboratories has found the new panel to pass durability tests based on US Department of Defense military standards. It withstood a waist-high 1.2-meter drop 26 times in succession, as well as temperature tests at 71 degrees and -32 degrees.

Even after a subsequent drop test administered at 1.8 meters (nearly 6 feet) above the ground—higher than the US military standard— it operated normally with no sign of damage.

On paper, it's better than Gorilla Glass 6—a major improvement over its predecessor, the new Corning glass can survive 15 drops from a height of 1 meter (3.2 feet) without shattering.

Samsung did not detail how scratchable its newly-launched plastic screen is.

In addition to smartphones, the new strengthened OLED panel should be used in other electronic products such as display consoles for automobiles, mobile military devices, portable game consoles and tablet PCs aimed at education.

Apple currently buys all its OLED panels for iPhone X from Samsung Display, but other suppliers are expected to jump in within a year or two. It's unclear if Apple plans on using this “unbreakable” screen given it's been using cover glass protection for iPhones from US-based Corning Glass, in which it invested $200 million in May 2017.

What do you make of Samsung's unbreakable OLED panel?

Let us know by leaving a comment below.

Nikkei: all iPhones released next year will use OLED screens

Apple will use advanced organic light-emitting diode (OLED) panels in all new iPhones launched from the second half of 2018, according to industry sources cited in a report Thursday by Japanese outlet Nikkei.

An industry source added that the Californian company is “tentatively looking” at releasing three new iPhones next year, adding Apple has already started to design the upcoming models.

Apple's plans are contingent upon suppliers' ability to churn out OLED panels in volume.

Because of that, the company could change its plans down the road. Sources in the OLED production equipment industry suggested that vendors may be unable to manufacture enough OLED panels to meet demand should Apple in fact go with OLEDs across 2018 iPhones.

An unnamed Sharp executive was quoted in the story as saying that “it was not likely” Apple will be using OLED screens for all new iPhones next year.

Here's a recent video of a CNC-machined iPhone 8 dummy based on the rumor-mill.

https://www.youtube.com/watch?v=pW1gx086ZxU

This year, as you know, Apple is widely expected to outfit iPhone 8 with an OLED-based screen.

The flagship device is expected to sport the highest screen-to-body ratio, ditch the physical Home button and reduce or completely eliminate the top and bottom chin.

Yuanta Investment Consulting said shipments of 2017 iPhones will reach 90 million handsets, half of which will be OLED models.

As for the iterative iPhone 7s and iPhone 7s Plus updates coming down the pike this year, these devices will continue to sport LCD screens like prior iPhone models.

Nikkei added that the iPhone 7s and iPhone 7s Plus models will be sold into early 2019. In other words, panel vendors will still be able to supply LCDs for older Apple handsets next year and well into 2019.