Another One Bites the Dust
Back in 2018 Jiangxi Infinitech Optoelectronics (pvt), a small Chinese firm, was looking to enter the display space and had plans to build an 80,000 sheet/month Gen 6 LCD/OLED fab in Jiangxi province with a budget of $3.52b US. The company let a number of purchase orders to South Korean equipment suppliers as construction began, with an initial completion date of 1Q 2019, but contractual deadlines kept being pushed out as the construction progress slowed. Top Engineering (065130.KS), YEST (122640.KS), DMS (068790.KS), and Vessel (177350.KS) were among those that renegotiated deadlines set to expire in late 2018 a number of times, only to see little or no payment. Contract extensions as far as December 30, 2020 still remained until the companies involved started voiding the contracts, with dwindling contact with Infintech.
A number of the companies accumulated materials necessary for the production of the items under contract and generated expenses against delivery, although it seems little equipment was actually produced. The amount still owed under the contracts, some of which run into 2021, comes to over $90m US. It seems that the construction of the factory has been halted for some time and the CEO and top executives of Infintech have departed, although the project is still considered ‘active’ and has not declared bankruptcy (yet). The South Korean equipment suppliers, along with the Korean Display Industry Association filed a complaint in July with the Chinese ambassador and have contacted Chinese law firms, the Jiangxi government, and the display association of China to check Infinitech’s status, but found that the Chinese construction company that had been hired to build the LCD fab has also filed a lawsuit against Infinitech halting all construction, with the court’s ruling that the company owes $29.7m in remaining construction costs and liquidating damages, although where that money will be coming from is yet unknown .
As we have previously noted China has been very aggressive over the last few years in building out its display infrastructure. That said, a number of projects we have seen announced either were absorbed by existing panel manufacturers or became mired in funding issues, some of which had to be taken over by local governments who are protecting their initial stakes in the projects. Infinitech’s project, while still in limbo, does not seem to be going anywhere and the prospects for those equipment suppliers who made and extended contracts with the company seem to be diminishing. While planning and raising initial capital for display capacity look very attractive to local governments and investors, the necessity for skilled management and investors who understand realistic timelines are most important.
China has been to a large degree successful in its push to dominate the display space, and seems to be heading in a similar direction in semiconductors, but the path to their display success is littered with a number of projects that seem to have disappeared or are in a ‘state of flux’ to put it gently. We have noted a few similarities in the semi space recently, where we expect the expertise and patience needed is even greater than in the display space. Sometimes money isn’t the only thing needed.
A number of the companies accumulated materials necessary for the production of the items under contract and generated expenses against delivery, although it seems little equipment was actually produced. The amount still owed under the contracts, some of which run into 2021, comes to over $90m US. It seems that the construction of the factory has been halted for some time and the CEO and top executives of Infintech have departed, although the project is still considered ‘active’ and has not declared bankruptcy (yet). The South Korean equipment suppliers, along with the Korean Display Industry Association filed a complaint in July with the Chinese ambassador and have contacted Chinese law firms, the Jiangxi government, and the display association of China to check Infinitech’s status, but found that the Chinese construction company that had been hired to build the LCD fab has also filed a lawsuit against Infinitech halting all construction, with the court’s ruling that the company owes $29.7m in remaining construction costs and liquidating damages, although where that money will be coming from is yet unknown .
As we have previously noted China has been very aggressive over the last few years in building out its display infrastructure. That said, a number of projects we have seen announced either were absorbed by existing panel manufacturers or became mired in funding issues, some of which had to be taken over by local governments who are protecting their initial stakes in the projects. Infinitech’s project, while still in limbo, does not seem to be going anywhere and the prospects for those equipment suppliers who made and extended contracts with the company seem to be diminishing. While planning and raising initial capital for display capacity look very attractive to local governments and investors, the necessity for skilled management and investors who understand realistic timelines are most important.
China has been to a large degree successful in its push to dominate the display space, and seems to be heading in a similar direction in semiconductors, but the path to their display success is littered with a number of projects that seem to have disappeared or are in a ‘state of flux’ to put it gently. We have noted a few similarities in the semi space recently, where we expect the expertise and patience needed is even greater than in the display space. Sometimes money isn’t the only thing needed.
Infinitech Gen 6 Project Rendering - Source: EDRI.net
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