Samsung’s hold over the mobile OLED market allows it to demand top dollar from its customers. It can also contractually obligate customers to purchase a certain quantity of panels. If they don’t meet the minimum order quantity, they have to pay Samsung a penalty.
Apple sources the majority of its OLED panels for the iPhone from Samsung Display. It’s required to meet the minimum order quantity or else pay a penalty. According to reports, Apple is now looking at a $1 billion penalty payment to Samsung Display.
This will not be the first time that Apple has to pay a penalty to Samsung Display for buying fewer OLED panels than previously agreed. Apple paid nearly $684 million to Samsung in Q2 2019 because it didn’t meet the minimum order quantity.
Recent reports in Korean media have suggested that Samsung Display might receive another penalty payment from Apple. A local media outlet had estimated that the penalty would be around $745 million. It’s now suggested that the actual amount is going to be much closer to $1 billion.