Globetronics counts on upgraded capabilities - MIDA | Malaysian Investment Development Authority
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Globetronics counts on upgraded capabilities

Globetronics counts on upgraded capabilities

13 May 2024

Globetronics Technology Bhd is now in a stronger position to take on fresh opportunities due to its investments in new equipment and upgraded capabilities.

These opportunities stem from potential customers looking for manufacturing partners, with the more significant opportunities coming from its diversification strategies in Taiwan and China due to the trade and geopolitical tensions arising from US-China relations, the group said in its 2023 annual report.

“After many months of high engagement by our CEO, business development director and team, we are now in the final stages of wrapping up some transfer products from these activities in the financial year 2024 (FY24).

“The closest opportunity for us currently would be the potential transfer of products from an optoelectronics company looking to consolidate some of their production volumes from Malaysia and China operations.

“This represents a big opportunity for Globetronics and we have started pre-positioning by consolidating production space in our factories,” it said.

According to Globetronics annual report, its Taiwanese collaboration in advanced packaging technology also showed good progress in FY23.

The report added that due to the high capital investment needed and the risk involved, the initial collaboration opportunity for a synergistic partnership started by drawing on the experience and contacts of both parties to win over new customers collectively.

“To date, for this collaboration, the group is in the finalisation stages of having two potential new customers initiate a transfer of memory and automotive products, some of which will start in the second half of FY24,” Globetronics added.

The new product introduction team continues to actively engage potential customers in developing exciting new products.

“We have progressed with customers and partners, which has enabled the development pipeline to be very healthy. New projects and products at different stages are targeted to go into production in FY24, FY25 and FY26.

“For quartz crystal timing devices, we went end-of-life with our Japanese customer in the first quarter of 2023, as the technology has become obsolete.

“In addition, we are now working with a new customer to produce microelectromechanical systems (MEMs)-based timing products in small volume builds targeted for the second half of FY24.”

With the plans and activities we have in place with customers and in the development pipeline, Globetronics said it is excited and optimistic about its prospects in FY24 and beyond.

The group plans to invest in advanced packaging technology with partners in FY24 to enable the offering of new products and processes such as the flip-chip scale package solution, wafer level chip scale package, fan-out wafer level packaging, flip-chip ball grid array and silicon photonics.

The group’s business dropped in FY23 due to the slowdown in semiconductor demand triggered by oversupply and cautious consumer spending, which is cyclical in the industry.

“After almost two years of lacklustre performance in the technology sector due to supply overhang caused by the transition from the Covid-19 pandemic to reopening, there are signs of green shoots in stabilising and slightly increasing demand for product loadings.

“This painful adjustment was necessary to pave the way for a sustainable recovery.

“For Globetronics, we also had to make painful adjustments in FY23 to restructure our operating base, given the expired pioneer status in one of the principal subsidiaries including an increase in the minimum wage and utility costs.

“As a result of the various measures that we have taken, together with investments in new equipment to upgrade our capabilities, we are now in a stronger position to take on the many opportunities heading our way,” it said.

Meanwhile, Globetronics had a slow start in the first quarter ended March 31 with revenue of RM29.9mil, translating into a net profit of RM5.7mil due to subdued global demand in the premium wearables space.

However, analysts expect its volume loading numbers to pick-up in the second half of the year from a low base and the introduction of next-gen sensors for the upcoming smartphone product cycle.

In a report, UOB Kay Hian Research said the group is rationalising its lower-margin business and pursuing new programmes with existing and new customers.

“While the group is still not fully out of the woods yet, the game changer could be the fruition of its active engagements with potential Chinese and Taiwanese customers, which could happen in late 2024,” the research firm said, maintaining a “hold” call on the stock with a target price of RM1.30.

Source: The Star