Chinese Panel Makers Delay Bringing in Display Equipment from South Korea

Mar 19, 2020

South Korea’s display equipment industry has been engulfed by the aftereffect of COVID-19. As Chinese panel makers that have faced a direct blow from the spread of COVID-19 are postponing their schedules for bringing in equipment from South Korea one after the other, the display equipment industry is in danger of facing repeated blows. Although it is expected to face a flow to its operation as it will not be able to receive payments on time, there is not any clear alternative as Chinese customers are also facing an unprecedented situation.
According to Financial Supervisory Service’s Data Analysis, Retrieval, and Transfer System, South Korea’s major display equipment makers have recently made public announcements that they have extended durations of their contracts signed with Chinese companies. As the Chinese Government has closed down few cities and limited traffic in order to prevent the spread of COVID-19, Chinese panel makers have decided to delay the timing of bringing in new equipment.
SFA has extended its contract with Tianma that was expected to terminate on the 14th by 6 months. Device ENG has also extended its contract with Tianma worth $7.93 million (10 billion KRW) until the end of the next month due to Tianma’s request. SNU Precision stated that its contract with BOE would be extended until October. All three contracts involve equipment that will be used for fabs located in Wuhan.
“Equipment ordered by Chinese panel makers are currently stored in warehouses.” said a representative for the industry. “As it is impossible to operate plants normally due to the aftereffect of COVID-19, schedules for the supply of equipment have also become unclear.”

Chinese Panel Makers Delay Bringing in Display Equipment from South Korea

There are also delays regarding supply of equipment for fabs located in other areas besides Wuhan. HKC, which is extending its display production line in Mianyang, recently made a request to Charm Engineering regarding postponement of the supply of equipment. BOE (Mianyang), Visionox (Hufei), and INFINTECH (Jiangxi) also extended their terms of contracts signed with Philoptics, ICD, and DMS respectively.
South Korea’s display equipment industry is concerned about the circulation of funds going downhill as Chinese makers delay bringing in equipment. It will be inevitable that the industry will face a blow to its operation if equipment that is worth millions of dollars per unit is tied to warehouses in South Korea. Considering the fact that the industry is mostly made up of small and medium companies, it is likely that they will lose their employees and face delays in their R&D as collection of payments for equipment scheduled to be supplied gets delayed.
Few South Korean companies are in a difficult situation regarding requests from their Chinese customers about sending equipment engineers. The main point of their requests is that they want engineers to enter China in advance and wait considering the fact that the Chinese Government has implemented a mandatory measure that isolates people coming from South Korea for 14 days. Ultimately, they cannot easily make decisions because there can be confirmed cases of COVID-19 out of business travelers in a worst-case scenario.
“Although Chinese panel makers are going through a difficult time, South Korean equipment makers are also facing a growing damage to their operations.” said a different representative for the industry. “We need to really think over measures that can minimize amount of damage we may face due to COVID-19.”
Staff Reporter Yoon, Heeseok | pioneer@etnews.com

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