Group chief executive officer Datuk Heng Huck Lee told StarBiz that the group spent about RM20mil for the first quarter.
“The capital expenditure went into expanding the production capacity for its wireless bluetooth gesture device for a global smartphone customer.
“We continue to see very strong traction and demand growth for this product. Over the last two to three years, the compounded annual growth is 20% to 30%.
“The annual projection continues to be very strong.
“For this year, we are seeing strong forecast across all the smart sensors for quarter one which is traditionally a softer quarter, ” he said.
According to Heng, the group usually doesn’t need to incur any capital expenditure to support its first-quarter production capacity.
“We may have to spend up to RM30m if the Covid-19 virus outbreak doesn’t disrupt the first half 2020 orders.
“The visibility for the second half 2020 may continue to be affected by the uncertainty caused by the US-China trade war and the Covid-19 outbreak, our near term forecast and projection remain to be very encouraging and strong, ” he said.
On the impact of disease outbreak, Heng said that the group can source alternative approved vendor list (AVL) electronic components or parts from South-East Asia.
“Although the AVL suppliers in China were shut down or delayed in resuming operations after Chinese New Year, we can maintain stable operation with these alternative AVL suppliers.
“We will continue to maintain 100% delivery performance for every product during this critical period of supply-chain disruption, ” he added.
According to Heng, the group will continue investing in high-precision tools and equipment to support the development of system-in-package modules to enhance the value of each new sensor.
“The release of new smart devices will drive the demand of the next-generation sensors, ” he added.
According to International Data Corporation, China’s smartphone shipments for the three months ending in March could decline by more than 30% from the same period a year ago, due to the virus outbreak.
“The virus outbreak will also “create uncertainty in product launch plans, the supply chain, and distribution channels, in the mid and long term, ” IDC said.
Research firm Canalys earlier this month predicted smartphone shipments in China could drop by as much as 50% for the first quarter.
A Digitimes Research estimates that global smartphone shipments are expected to reach 1.278 billion units in 2020, including less than 200 million units of 5G models, taking into account the impacts of the coronavirus outbreak on China and around the world in terms of economic growth.
“Although most assembly plants and supply chain makers of the leading brands have resumed operations leveraging inventories stockpiled before the Lunar New Year holiday, the capacity utilisation rates of some key component makers such as those for camera lenses, chassis, and touch modules currently reach about 20-40%, with a few at 50%.
“However, since only large-scale supply chain makers are currently running at lower capacities and a large number of small makers are awaiting approvals from local governments to restart facilities, the handset industry faces the mounting risks of supply chain disruption in March should any kind of components or materials run out of the stock, ” the Digitimes Research report says.
Source: The Star