Apple has paid Samsung 800 billion won ($683 million) for not buying as many OLED panels as it had agreed upon in its initial agreement with the Korean display maker.
It was originally reported last month that Apple would be paying Samsung a hefty fine for not sourcing as many OLED panels as it had initially hoped for, though the fine amount was not clear. However, Samsung has now forecasted its operating profit for Q2 2019 which includes a one-time gain of 800 billion won as reimbursement from Apple.
Based on Apple’s agreement, Samsung had set up an OLED production line especially dedicated to its requirement. But the low demand for the iPhone X meant that the production line was underutilized and was working at half its capacity. This led Samsung to incur hefty losses for which Apple was due to reimburse it as a part of their original agreement.
Back then, the fine amount was not clear. Despite the payment from Apple, Samsung’s operating profit for the second quarter is expected to decline by 56 percent to 6.5 trillion won ($5.6 billion) on revenues of 56 trillion won ($48 billion). This will be the third consecutive quarter in which Samsung has posted a decline in its profit.
The Korean conglomerate is struggling due to the trade war with China, falling chip prices, and stiff competition in the smartphone market which has seen Samsung lose its position in many markets to Chinese rivals like Oppo, Vivo, and Huawei.[Via Reuters]