The Korea Herald reports that Apple is likely to pay Samsung over the shortfall of OLED orders. Samsung Display is an affiliate of Samsung Electronic which is the only supplier of 5.4-inch OLED panel of iPhone 12 mini. Thus, in January the manufacture’s worldwide small OLED shipments dropped by 9% month-to-month to 45 million units due to lower than expected sales of the smallest.
Since the launch in October, the compact iPhone 12 mini model was not a hit with the consumers, and reports of poor sales were circulating in the industry. Despite offer advanced features like 5G network support, OLED display, A14 Bionic processor, and much more in the smallest iPhone had only captured a 9% share of sales by January 2021. It was reported that buyers preferred the bigger smartphone models like the iPhone 12 Pro, Pro Max, iPhone 11, and iPhone SE models because of the bigger screen and battery.
Lower than expected iPhone 12 mini sales might cost Apple to reimburse Samsung for orders shortfall
As per the industry sources, Apple would not pay a “penalty’ but a “compensation” to the manufacturer over not meeting the minimum order quantity.
Industry observers are now predicting that Apple may once again have to pay Samsung a hefty penalty for not meeting the minimum order quantity. Apple reportedly paid an estimated $684 million in 2019 and $1 billion in 2020 to Samsung Display for below-par OLED panel orders.
“It is uncertain whether Apple would pay a penalty to Samsung Display, but considering its contract history and sluggish sales of the iPhone 12 mini, it is likely that Apple will compensate Samsung Display,” an industry official said on condition of anonymity.
Recently, Apple cut production of the latest flagship series by an average of 20% for the first half of 2021 which includes a 70% production cut of iPhone 12 mini. However, it is also reported that the Cupertino tech giant will include the 5.4-inch variant in the upcoming iPhone 13 series.