In Major Plot Twist, Apple May Have to Pay Samsung for Poor iPhone 12 mini Sales (Here’s Why)

iPhone 12 mini Credit: Apple
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In an ironic twist, it looks like Apple could actually be forced to compensate its arch-rival, Samsung, as a result of poor iPhone 12 mini sales.

While that may sound bizarre on the surface, it’s important to remember the Samsung isn’t just the company that makes the iPhone’s biggest competition. The South Korean electronics giant not only has its fingers in everything from televisions to refrigerators, but it’s also a major component supplier for the iPhone — and it has been for years.

As much as Apple wants to bring the entire iPhone manufacturing process under its direct control, there are still things that the Cupertino company hasn’t been willing or able to pull off by itself. Chief among these are the LCD and OLED displays that are critical components of almost every single device Apple sells.

Rather than manufacturing displays in-house, Apple relies on an assortment of other manufacturers to produce them, including Japan Display, LG, BOE, and…. Samsung.

To be fair, Samsung Display is an entirely separate division within the conglomerate, but not only has it been making displays for Apple for years, but it’s invested billions to become Apple’s primarily OLED display supplier.

With such massive investments, however, Samsung naturally has a right to expect Apple to commit to ordering a certain number of displays each year, and as with any contract, there are penalties if it fails to meet its commitments.

iPhone 12 mini Displays

According to The Korea Herald, this is exactly what seems to have happened with the iPhone 12 lineup, dragged down by the iPhone 12 mini which fell well below Apple’s expectations.

As MacRumors notes, shipments of “small” OLED panels — those used on smartphones and tablets, as opposed to monitors and televisions — appear to have dropped globally in January by around 9 percent. The data comes from market analyst Omdia, which points to the sluggish iPhone 12 mini sales as the main factor.

An anonymous industry official told The Korean Herald that it’s “likely” that Apple will be required to compensate Samsung for the shortfall between the number of displays it had committed to and the number it’s actually received.

Although Apple uses OLED displays from a few different vendors in the iPhone 12 lineup, displays for the 5.4-inch model come exclusively from Samsung.

This wouldn’t be the first time that Apple has had to cough up a penalty to Samsung for ordering fewer displays than it had originally estimated. A shortfall back in 2019 led to rumours that Apple may have looked for other ways to make up the difference, but in the end, it paid out $683 million instead. In 2020, that payout rose to $950 million, so it seems like those years may have been the beginning of a trend.

It’s also worth keeping in mind that analysts have recently revealed that Apple may have deliberately overestimated its iPhone orders last year just to make sure it could secure the production capacity and components it needed to keep up with demand during the uncertainty of the COVID-19 pandemic.

In this case, it’s almost certain that Samsung displays would have been part of this optimistic estimate, and Apple has reportedly cut production of all of its other iPhone 12 models by 20 percent across the board, although the iPhone 12 mini is still getting a much deeper drop of an extra 50 percent.

While the 5.4-inch iPhone 12 mini hasn’t proven as popular as many people expected — like for many good reasons — there’s every indication that Apple is not about to throw in the towel just yet, so we’ll almost certainly see an “iPhone 13 mini” this year.

[The information provided in this article has NOT been confirmed by Apple and may be speculation. Provided details may not be factual. Take all rumors, tech or otherwise, with a grain of salt.]

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