Nikon gets Foxconn request to delay equipment installation at China plant

TOKYO (Reuters) – Nikon Corp said Foxconn Technology Group had requested to delay the instalment of equipment at the Taiwanese firm’s new liquid crystal display (LCD) plant in the southern Chinese city of Guangzhou.

FILE PHOTO: The logo of Foxconn, the trading name of Hon Hai Precision Industry, is seen on top of the company’s building in Taipei, Taiwan, March 30, 2018. REUTERS/Tyrone Siu/File Photo

Comments from the Japanese equipment maker come after Foxconn, formally Hon Hai Precision Industry Co, last week said its plant at Guangzhou was on schedule and denied a media report of production delay.

“We received the request for delay last month,” Nikon’s finance chief Masashi Oka said at an earnings briefing. “But we are yet to discuss how long we should delay and other details.”

Nikon also said on Thursday a client or clients in China had postponed orders for semiconductor-producing equipment and that it had cut its sales outlook for the business for the year ending March.

The company raised its annual operating profit outlook due to a one-off profit from a lawsuit settlement with ASML. But the bleaker forecast for the chip equipment business, coupled with weaker sales of digital cameras, sent Nikon’s shares down more than 10 percent on Friday.

Foxconn’s request and Nikon’s weaker forecast come at a time when tech companies are bracing for a tough year in China as growth in the world’s No.2 economy slows, exacerbated by a protracted Sino-U.S. trade war.

Industry behemoths such as Apple, Samsung Electronics and Intel have already warned of weaker demand for electronic devices in the country.

The Nikkei business daily reported last week that Foxconn, the world’s largest contract electronics manufacturer, would delay most of its planned production in the Guangzhou project for a minimum of six months.

But, when contacted by Reuters on Thursday, Foxconn reiterated that its Guangzhou project was “on schedule”.

“We will commemorate the installation of the first Exposure System in Guangzhou later this month. Further updates will be shared in due course,” it said.

Foxconn announced the $8.8 billion Guangzhou plant in 2016, hoping to start operations by 2019 to meet an expected rise in demand for large-screen TVs and monitors in Asia.

Nikon is a top supplier of lithography systems for the so-called Gen-10.5 plants, such as Foxconn’s Guangzhou project, that specialize in large-screen flat panel displays.

Last week, Foxconn said it would build a panel factory in Wisconsin, following a report from Reuters that the Taiwanese company was reconsidering the $10 billion project.

Reporting by Makiko Yamazaki; Editing by Himani Sarkar and Christopher Cushing

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