SDP: Mass production of Guangzhou Zengcheng panel factory delayed by 6 months, payment will be made as agreed

Foxconn's indirect investment in SDP, a panel factory under Japan's Sharp, said that the mass production schedule of the company's panel factory in Zengcheng, Guangzhou (Super View Sakai Company) in mainland China has been postponed by 6 months to April 2020.

Regarding the payment for related equipment, SDP stated that 60% has been paid, and for the remaining part, most Japanese manufacturers have agreed to the conditions proposed by the company. As for the Taiwanese manufacturers, approximately NT$8.4 billion has not yet been delivered or paid, and the payment will be made in full accordance with the terms of the original purchase contract.

According to recent media reports, SDP's Guangzhou Zengcheng panel factory launched its first 65-inch panel product on August 1 this year. It was originally expected to start mass production at the end of September, but because the Guangzhou Zengcheng panel factory is urgently looking for buyers, the mass production plan will be temporarily suspended.

Because the mass production plan will be suspended, related equipment suppliers have also reported that the equipment payments that should have been received may not be received. It was even reported at one point that Foxconn and Sharp will negotiate with related equipment suppliers.

Regarding the current payment status of the equipment at the Guangzhou Zengcheng Panel Factory, SDP emphasized that 60% of the total purchase amount of this case has been paid and there is no problem at all.

In addition, about 40% of the total amount has been purchased but has yet to be paid. SDP said that Japanese manufacturers account for about 40%, of which the vast majority of manufacturers have agreed to the conditions proposed by the company. As for Taiwanese manufacturers, the amount is NT$8.4 billion that has not yet been delivered or paid. Since most Taiwanese suppliers are small and medium-sized enterprises, the payment operations for Taiwanese suppliers will be carried out in full accordance with the original purchase contract conditions.

On December 30, 2016, Sakai Display Production Co., Ltd. (SDP) and the Guangzhou Municipal Government jointly signed the "10.5-generation display full-eco industrial park construction project cooperation framework agreement". The two parties agreed to invest RMB 61 billion in Zengcheng, Guangzhou to build a 10.5-generation display full-eco industrial park with the world's highest yield and production capacity. The relevant project was laid in March 2017 and the main plant was capped in June 2018. The designed production capacity is 90,000 glass substrates per month (glass substrate size is 3370mm x 2940mm), and it is mainly focused on the production of 65-inch and 75-inch products.

According to the relevant agreement plan, the 10.5-generation production line will introduce Indium Gallium Zinc Oxide technology and is expected to start mass production in 2019, with an estimated annual output value of RMB 92 billion.