Foxconn is paying back its suppliers as its Gen-10.5 LCD production lines in Guanzhou of China are becoming normalized, according to industry sources.
Due to a stop-still in Foxconn’s plans for mass production, local display equipment suppliers have been unable to receive payment for their equipment – both that have already been installed or are being produced. Foxconn is now set to begin mass production early 2020 on forecasts that panel prices will soon rise.
Top Engineering is one of the local suppliers that recently loaded the final batch of equipment worth around KRW 6 billion ordered by Foxconn. “Our contract with Sakai SIO was 100% LC-based,” said one Top Engineering official. Sakai SIO is the corporation running the Foxconn plant. Under an entirely LC-based contract, suppliers can get paid directly by the bank as soon as the equipment enters the facilities.
Another supplier DIT was paid for all of the delayed payments for its equipment in a TT contract with KRW 13 billion, except for the FAT payment that it expects to be paid when the production lines begin running. Under a TT contract, the display maker sends the payment directly to the equipment maker. Most equipment manufacturers prefer TT contracts over LC.
SFA, South Korea’s largest display equipment manufacturer, has also wrapped up talks with Foxconn on receiving its delayed payments worth around KRW 250 billion.
Towards DMS, Foxconn has asked it send its equipment earlier than planned. DMS officials said that the two parties were in “positive talks” over future business.
The delayed payments by Foxconn erupted after the Taiwanese company failed to abide by its mass production schedule of October this year. Shortly afterward that announcement, Foxconn’s Japanese affiliate SDP officially announced that mass production would be pushed back to April, adding that even April may not be doable.
The Taiwanese press reported on Dec.23 that the Gen-10.5 production lines have begun setting up the equipment, adding that many equipment makers have received requests to set up the equipment earlier than scheduled.
The Elec is South Korea’s No.1 tech news platform.