Tech firms will not rush to invest after MCO is lifted

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GEORGE TOWN: Local sensor and semiconductor test equipment manufacturers will remain cautious in regards to their business recovery plans even after the Movement Control Order (MCO) is lifted.

Globetronics Technology Bhd

 chief executive officer Datuk Heng Huck Lee(pic below) told StarBiz that even after the MCO is lifted in Malaysia, it does not mean that the group will rush to invest for new volume forecast to drive growth.

“The other parts of the globe may not be ready to really open up and that will affect orders for smart devices, sensors, and semiconductor test-equipment.

“China, for example, is now ready to produce, but its ability to get its supply of raw materials from non-China manufacturers may become the new constraints.

“The lock down and economic uncertainties will also impact the global demand for consumer electronic products, ” Heng added.

According to Heng, there is high possibility of the global economy getting entering into depression.

“We hope it will be a V-shaped recovery, which is characterised by a sharp decline and by a quick and sustained recovery, ” Heng added.

The group will continue to invest in design and develop activities so that it can continue to fulfill the commitments of the new projects, said Heng.

According to Heng, the group will discuss with customers before committing itself to new capital expenditure for the second quarter of 2020.

“The group plans to relook into the current supply chain for raw materials and supporting tools.

“We will enhance our IT infrastructure and technology that will enable us to leverage on virtual conferencing.

“We shall also accelerate our plan to expand our Industrial 4.0 initiatives by making further investment s into automation and internet of things (IoT) to reduce our dependency on the workforce.

”Our investment into IoT connectivity has paid off as it help us to maintain quality and stable operation with a skeletal workforce during this period, ” Heng added.

On its first quarter results, Heng said that thanks to the efforts of its committed staff, the group managed to achieve its targets.

“We will postpone our first quarter results announcement to May 20 due to the MCO, ” he said.

Pentamaster Corp Bhd(pic below) chairman CB Chuah said he expects to see massive unemployment around the world after the global lockdown, which will slash the purchasing power of consumers.

“During this slow period, the group will focus on design and development activities to develop the latest smart sensor technology testing.

“However, will still have projects with our key customers and we will invest accordingly to meet the needs of the projects, ” Chuah added.

Chuah said there will be a need to establish an alternative supply hub.

“From the lock down, we learn that we can’t just rely on local supply chain alone to deliver.

“There has to be an alternative site for us to source raw materials and standard components.

“We will also explore new technologies to make semiconductor test equipment that consume less raw materials or with design that can easily switch to different make of standard components, “ he said.

ELSOFT RESEARCH BHD chief executive officer CE Tan said the group’s business recovery plan will depend very much on the economic scenario around the globe.

“But we can definitely expect to see a global slowdown in the demand for consumer goods.

“However, we will continue to allocate for our design and development expenditure so that our projects with regular customers can proceed, ” Tan added.

Tan said the group is enhancing its IT development tools to allow engineers to work at office as well as work from home.

“We have received more new project enquiries from customers, in line with our diversification plans.

“We will also making a new series of embedded controller for the medical sector to drive business growth.

“The medical sector is one the few areas where we believe the demand will be constant even if the world sinks into a depression, ” he added.

MMS VENTURES BHD managing director TK Sia said the group will definitely explore new business growth drivers.

“Even though the world will be in a depression, there will be areas like the automotive industry that we can looking at.

“The automotive sector will definitely help to contribute to our revenue over the next five years.

“It is a very competitive market, but we expect our market share to grow gradually because of the market size, ” he added.

“However, we will have to be cautious with making new investments, ” he added.

An industry source shared that during the MCO, some players have experienced delays in fulfilling orders due to MCO mandates, such as operating with 50% workforce and shorter operation hours from 8am to 8pm, as compared to the usual 24 hours.

The source noted that while the demand and order book for semiconductor and electronic manufacturing services (EMS) industry remains, it was not on par to the forecasted demand prior to the Covid-19 outbreak.

“The semiconductor industry growth this year was expected to be better than last year, but there is no use having strong demand when manufacturers are unable to deliver.

“Some analysts forecast business as usual for the industry after six to 12 months, but the impact of Covid-19 to the macro economy is great.

“With so much uncertainty, there is no telling how long it will take for business to be as usual.

“What is more important now is to ensure that businesses survive and we remain in good health, ” the source said.

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