Phoenix Semicon renews supply deal with Samsung

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LISTED Phoenix Semiconductor Philippines Corp. (PSPC) said it has secured a new contract with Samsung Electronics for the production of the latter’s memory products, although the chip maker remains “cautiously” optimistic on the recovery of the industry in the second half of the year.

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In a disclosure to the Philippine Stock Exchange on Wednesday, the semiconductor firm said that while the existing Business Transaction Agreement (BTA) with Samsung provided for an extension until February next year, the parties have forged a new agreement which effectively renews its existing BTA for another three years beginning June 1, 2016.

The new agreement also provides for an automatic renewal for another one year should no amendment be found necessary by any of the contracting 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,” PSPC President Byeongchun Lee said.
Lee noted that the renewed contract would continue the strategic partnership between Samsung, SFA (STS) and PSPC.

The common practice in the global outsourced semiconductor assembly and test industry (OSAT) is a “purchase order-based contract,” thus making PSPC’s long-term based contract with Samsung unique among industry players, he said.

“A long-term based contract for a semiconductor company is something unique to PSPC among OSAT industry players in the world,” Lee said.

Under 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 stringent standards of product quality and manufacturing efficiencies.

In line with its strategic partnership, PSPC has continually moved up the technology platforms of Samsung, which is a global leader in consumer electronics and the world’s second largest semiconductor company.

Last year, PSPC shipped memory products with an export value of $2.53 billion.

Its major product lines include 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 utilized last year 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 is 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,” said Lee.

He said the PSPC remains cautiously optimistic that a turnaround in the global semiconductor industry will commence in the second half of the year.

In 2015, PSPC’s net income fell to $13.6 million, down almost 23 percent from $17.45 million the year, before on account of China’s weaker economy which resulted in weaker demand from its main client Samsung.

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