Haesung DS (KOSDKQ: 195870), the only semiconductor company in Gyeongnam and a pioneer in supplier partnerships, emphasized the importance of a payment-linked system for maintaining competitiveness in the global semiconductor market.

A representative from a partnering company stated, "We've been trading with Haesung DS since 1993. Without the payment-linked system, they would not have developed their unique plating technology, PPF. This system is essential for long-term supply in the semiconductor industry."

During a meeting on October 7 at Haesung DS's headquarters in Gangnam, the Ministry of SMEs and Startups discussed successful examples of this payment-linked system, aiming to expand its implementation across the industry.

Haesung DS produces high-reliability semiconductor lead frames and package substrates, leading the global market with its proprietary PPF technology. The company reported sales of 670 billion won (approximately $500 million) last year and employs 1,372 staff members.

Before the formal legislation of the payment-linked system, Haesung DS proactively worked with suppliers to reflect fluctuations in raw material prices, such as nickel and copper, in their pricing. They have established agreements with seven suppliers, becoming the first company to adopt this system.

More than 65% of Haesung DS’s raw material transactions are linked to this system, with 432 linked orders amounting to 178 billion won (approximately $134 million) processed last year. During the pandemic, the company even extended price adjustments to pharmaceuticals, highlighting their commitment to collaborative practices.

CEO Cho Byeong-hak noted, "The semiconductor market uses highly volatile materials. Without a payment-linked system, both Haesung DS and its partners would suffer in the global market. We've adjusted prices in line with fluctuations in precious metals, copper, and nickel."

Partner companies stressed that the payment-linked system is crucial for ensuring a steady supply of materials. Lee Seung-hwan, CEO of Shinpoong Metal, stated, "The system enabled us to supply palladium since 1993, despite the price soaring from $80 to $3,000. A fixed-price model is impractical for such volatile materials."

MK Chem & Tech’s CEO Kwon Hyuk-seok remarked that their business relies on their partnership with Haesung DS, attributing their ability to secure raw materials to the payment-linked agreements.

However, the partners identified a lack of awareness as a barrier to wider adoption. Yoo Jae-hyung, VP of ORChem, explained that suppliers often hesitate to disclose cost data, despite the system's benefits.

To address this, they called on the Ministry of SMEs and Startups to enhance promotional efforts, particularly for second- and third-tier suppliers. Kwon emphasized that many of these suppliers are still unaware of the system, suggesting that government initiatives need more time to take root.

Yoo proposed that they advocate for the payment-linked system to their major clients, promising to ask leading partners why they have not yet adopted it.

The Ministry of SMEs and Startups plans to support the expansion of the payment-linked system, increasing participation from 50 last year to 1,000 this year. Key initiatives will focus on verifying essential raw materials and providing education on the system.

Vice Minister Oh Ki-woong stated, "The payment-linked system is crucial for ensuring quality and sustainability for suppliers. We need to promote this win-win approach more widely and support its implementation through enhanced field assistance and the identification of exemplary cases."