CEO Morning Brief

Globetronics in Final Talks With Two Potential Customers for Advanced Packaging

Publish date: Wed, 17 Apr 2024, 09:03 AM
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TheEdge CEO Morning Brief
Globetronics Technology Bhd is in talks with two potential new customers to initiate transfer of memory and automotive products. It is also in talks with a top Taiwanese OSAT player specialising in advanced packaging, to bring its technological know-how to Malaysia.

KUALA LUMPUR (April 16): Outsourced semiconductor assembly and testing (OSAT) player Globetronics Technology Bhd is in the final stages of discussion with two prospective clients interested in leveraging advanced packaging technology.

“We are in finalisation stages to have two potential new customers initiate transfer of memory and automotive products, some of which will start in the second half of the financial year ending Dec 31, 2024 (FY2024),” said the group's executive chairman Liaw Way Gian in its 2023 annual report released on Tuesday.

Globetronics' chief executive officer Heng Charng Yee told The Edge Malaysia in a recent interview, published for the week of April 15-21, that the group was planning to diversify into advanced packaging to meet the growing demand for such services. The new business segment, which will enable Globetronics to package semiconductor chips supportive of artificial intelligence (AI) technology, is poised to become the group’s future revenue growth driver.

A subset of traditional packaging that boosts computational capabilities while lowering power consumption and costs, advanced packaging also offers higher profit margins than traditional packaging. Demands for AI, 5G technology and the Internet of Things drives growth for advanced packaging, prompting more companies to invest in such technology.

The group is also in talks with a top Taiwanese OSAT player specialising in advanced packaging, to bring its technological know-how to Malaysia. "We are in discussion now about the investment plan. The timeline to set up the facility can be as short as nine months to up to two years [after the deal concludes]," Heng was quoted as saying.

Meanwhile, Liaw, in Globetronics' latest annual report, said the group is seeing opportunities from potential customers looking for manufacturing partners, with "bigger opportunities" coming mainly from diversification strategies from Taiwan and China due to trade and geopolitical tensions between the US and China.

"The closest opportunity for us currently would be the potential transfer of products from an optoelectronics company that is looking to consolidate its production from Malaysia and China operations. This represents a big opportunity for the company and we have started pre-positioning by consolidating production space in our factories," Liaw said.

“For quartz crystal timing devices, we have gone End of Life (EOL) with our Japanese customer in the first quarter of 2023 as the technology has become obsolete. Further to this, we are now working with a new customer to produce MEMs-based [micro-electromechanical systems] timing products with small volume builds targeted for 2HFY2024,” she added.

As such, the group is "excited and optimistic" about its future prospects.

Globetronics’ FY2023 earnings tumbled by 41.9% year-on-year, due to reduced volume loadings from its customers as well as increased tax expenses and utility costs. Net profit dropped to RM26.4 million — its weakest annual earnings in seven years — from RM45.46 million in FY2022. Revenue declined by 26.8% to RM131.82 million from RM180.05 million.

Shares of Globetronics closed seven sen or 5.1% lower at RM1.29 on Tuesday, valuing the company at RM871 million. The stock has fallen over 19% year to date.

Source: TheEdge - 17 Apr 2024

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