UPDATED. 2024-05-20 21:44 (월)
Apple forced to compensate Samsung Display
Apple forced to compensate Samsung Display
  • Jongjun LEE
  • 승인 2019.07.10 13:26
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American tech company forked over W900b: analysts

California-based Apple reportedly paid around 900 billion won ($765.5 million) to Samsung Display in the second quarter of this year for failing to take on an agreed volume of flexible OLED panels for its smartphones.

On July 5, Samsung said in its earnings guidance that its second quarter earnings includes a temporary profit in the display business, which analysts interpreted to indicate the fine paid by Apple.

“After falling short in terms of panel orders, Apple seems to have forked over around 900 billion won as a penalty, and this was most likely reflected in Samsung Electronics’ second quarter earnings,” said Kim Sun-woo, a researcher at Meritz Securities.

Since early this year, Samsung Display’s production lines allotted for Apple had been manifesting slow operating rates.

Market research firm HIS Markit data showed Samsung Display’s A3 plant in Asan of South Chungcheong Province operating at a rate of just 27.2% in March, 24.% in April and 28.7% in May. This compares with previous data of 45.6% and 55.6% for the months of March and April.

Among the nine production lines at A3, seven of them are earmarked for Apple products. These lines have a combined monthly production capacity of 105,000 for the 6th generation panels. The remaining two lines with 30,000 monthly capacity are allotted for Samsung smartphones. Apple usually demands suppliers to run exclusive lines for its products.

When excluding the 900 billion won penalty, Samsung Display appears to have incurred a loss, according to Meritz Securities’ estimate that puts Samsung Electronics’ display business’ operating profit at 700 billion won. Samsung Display’s A2 plant, which produces rigid OLED panels, is showing high operation rates, but it’s not enough to push the display maker into the black on its own, according to experts.

HIS Markit has now cut its operating rate projection for the A3 plant, while raising it for the A2 plant, which has been manifesting high operation rates throughout this year, with the February figure hitting 78.7%.

The Elec is South Korea’s No.1 tech news platform.

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