For Apple, right now, it’s one step forward and two steps back. Having been hit by the exposure of 1.4BN iPhones and iPads worldwide, Apple has made the smart decision to cancel its 5.8-inch iPhone. But now a new embarrassment has struck.
In an exclusive, the ever-reliable ETNews reveals Apple is facing fines worth hundreds of millions of dollars because it cannot sell enough iPhones. Moreover, it is chief rival Samsung which warned Apple it will collect this debt and the consequences will interest every Apple fan.
The reason Samsung is seeking “hundreds of billions of won” (100BN won is over $86M) because Apple “demanded” that Samsung build a massive OLED display facility exclusively for iPhones. Apple drove its construction based on claims it would require 100M OLED iPhone screens per year from the factory but, rather than increasing sales, demand for iPhones has subsequently slumped.
In fact, ETNews says the plant is currently working at under 50% capacity (that’s a serious miss in Apple’s estimates) and the combination of heavy upfront investment and dead production lines has been a major factor in Samsung Display’s operating profit crashing from 5.7TR won ($4.9BN) in 2017 to 2.62TR won ($2.26BN) last year. Further angering Samsung, at the start of production at the new factory, ETNews says Apple was quick to hit Samsung with penalties are some panels suffered manufacturing issues.
But this is where it gets exciting for all Apple fans.
ETNews says Apple is unlikely to pay the fee but will compensate Samsung instead via additional contracts for OLED panels in new devices. We already know the 2020 iPhone XR will adopt OLED but that is not enough to cover the shortfall on its own, so the additional capacity is understood to be used creating OLED panel upgrades for iPads and MacBooks.
This would be a massive boost to customers as, despite their premium price tags, MacBook and iPad Pro ranges are still stuck with LCD. Apple is known to be working with Foxconn on ‘Micro LED’, a next-gen display technology with the potential to supersede OLED, but it won’t be ready for several years.
As such, Apple’s overconfidence looks set to be everyone else’s gain. And with 2020 iPhones showing exactly why the upcoming 2019 iPhones are not worth buying, the introduction of OLED displays for iPads and MacBooks only looks set to accelerate.
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