Samsung Ink Production Contract Renewal

Pampanga—(PHStocks)—Phoenix Semiconductor Philippines Corp. (PSE: PSPC) has signed with Samsung Electronics Co. Ltd (Samsung) and SFA Semicon Co. Ltd (SSK), formerly known as STS Semiconductor Telecommunications Co. Ltd (STS) the Master Agreement for the production of memory products for Samsung of South Korea.

The existing Business Transaction Agreement (BTA) with Samsung provides for an extension until February 2017 but in a disclosure to the Philippine Stock Exchange, PSPC said that its new Agreement effectively renews the existing BTA for three more years more effective June 1, 2016. It also provides for an automatic renewal for one year if no amendments will be found needed by any of the parties.

“We are pleased that our partnership with global leader Samsung Electronics has been renewed and we thank them for their continued trust and confidence in the outstanding manufacturing efficiencies and quality of PSPC,” said PSPC President Byeongchun Lee.

He noted that the renewed contract seals once again the continued strategic partnership between Samsung, SFA (STS) and PSPC. The common practice in the global outsourced semiconductor assembly and test (OSAT) industry is a purchase-order-based contract. “A long term based contract for a semiconductor company is something unique to PSPC among OSAT industry players in the world,” Lee explained.

Based on the Agreement, Samsung shall continue to supply important critical production materials and state-of-the-art semiconductor manufacturing and testing equipment over the contract period to ensure that PSPC conforms to the former’s highest standards of product quality and manufacturing efficiencies.

Recently, PSPC took delivery of production equipment from Samsung and ramped up the production capacity in line with the technology shift in its memory products from the DDR3 to the higher-capacity DDR4 and its flash memory cards to the V-NAND platforms. These technology-advanced equipment add to the Samsung’s production equipment that have been supplied to the existing exclusive Samsung Phase 1 facility since the start of PSPC operations in 2011.

In line with this strategic partnership, PSPC has continually moved up the technology platforms of Samsung, the acknowledged global leader in consumer electronics and semiconductors.

PSPC shipped $2.53 billion export value of memory products in 2015. Its major product lines are Dynamic Random Access Memory (DRAM) and memory chips for desktop computer work stations and servers, PCs, laptops and ultrabooks, as well as Samsung branded memory secured digital (SD) cards.

In December 2014, PSPC raised P468 million from the primary portion of its initial public offering, the proceeds of which were used in 2015 primarily for the expansion of the existing Phase 1 production plant, mainly for the installation of the memory card packaging production line.

Lee assured that PSPC remains committed to undertake the planned construction of the proposed Phase 2 facility to serve non-Samsung customers to gear up the company for the eventual recovery of the semiconductor industry.

“The renewal of our agreement with Samsung is a testament to the outstanding semiconductor manufacturing competency of PSPC,” Lee said. He added that the company remains cautiously optimistic that a turn-around in the global semiconductor industry will commence in the second semester of the year.

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