SSP Continues Its Business Agreement with Major Customer Through Its Parent Company
Publicly listed SFA Semicon Philippines Corporation (PSE: SSP) announced that its board of directors approved a Business Transaction Agreement (BTA) with its parent company, SFA Semicon Co., LTD. (SSK) for the production of memory and other products for its end customer. The BTA shall take effect from July 1, 2019 to June 30, 2020 renewable each year, thereafter.
In its board meeting held June 26, SSP board approved the agreement with SSK under the same terms and conditions of the previous Business Transaction Agreement (BTA) signed between SSP and its Customer in 2016 which expired on May 31, 2019.
The new BTA complements the agreement signed by SSK with the end Customer in South Korea. It contains basically the same terms and conditions of the BTA in 2016. The continuation of the production partnership through SSP’s parent company is in accordance with the Customer’s internal procedure of signing its business contracts only with its suppliers’ headquarters and not with the subsidiary companies.
The SSP board of directors approved the BTA guided by the transfer pricing study conducted by SGV and Company in accordance with the Securities & Exchange Commission Memorandum Circular No. 10 series of 2019 Rules on Material Related Party Transactions for Publicly Listed Companies.
“The continuation of SSP’s partnership with its esteemed long-time customer under SSK is a testament to the Customer’s trust and confidence in the Company since 2011,” SSP Chairman and President Joon Sang Kang said.
Under the terms of the new BTA, the Customer shall continue to supply wafer and critical production materials and consign state-of-the-art semiconductor manufacturing and testing equipment over the contract period. SSK shall negotiate for product output volume and selling prices for all product lines on a periodic basis based on market demand.
SSP explained that the common practice in the global outsourced semiconductor assembly and test (OSAT) industry is a purchase-order-based contract. The yearly contract represents a partnership which ensures product quality and stable production output in an industry with uncertainties in manufacturing capacities and supply chain imbalances.