IAI Secures Additional 4.7 Billion KRW in Technology Fees from Chinese EV Parts... Accelerates Prototype Production

[Asia Economy Reporter Jang Hyowon] Future car core parts company IAE announced on the 17th that it has additionally received 4.7 billion KRW in technology development service fees from its joint venture (JV) in Yancheng City, China, ‘IAE Power Electronics Co., Ltd.’

The 4.7 billion KRW deposited this time is an advance payment of the 6.3 million USD technology development service fee scheduled to be received in the second year of the project. The first-year technology development service fee of 12 billion KRW (10.5 million USD) was fully received in November last year.

An IAE official explained, "Despite the difficult global economic situation due to the spread of the novel coronavirus (COVID-19), the power module project underway with the Yancheng city government in China is progressing without any setbacks. The Chinese city government is strongly promoting the project, so the second installment of the technology fee was deposited much earlier than originally expected, and accordingly, preparations for prototype production are also progressing rapidly."

IAE Power Electronics Co., Ltd. is a joint venture established by IAE in July last year with the Yancheng city government in China to promote the Chinese electric vehicle parts business. It develops and produces power modules and power controllers. IAE provides technology services related to power modules and power controllers to IAE Power Electronics Co., Ltd. and is scheduled to receive a total of 21 million USD (approximately 25.7 billion KRW) in technology development service fees over three years.

The technology development service fees are recognized as revenue based on progress, and due to a low cost ratio, most of the sales are reflected as operating profit. Last year, 6.3 billion KRW out of the 12 billion KRW first-year technology development service fee was recognized as sales, and it is expected to significantly contribute to this year’s performance as well.

A company official stated, “Last year, on a separate basis, sales grew by more than 40%, achieving a significant turnaround to profitability. With the full-scale product launch scheduled for this year, we expect to continuously maintain a profitable trend.”

This content was produced with the assistance of AI translation services.