Malaysia's Globetronics Technology Bhd is feeling the heat these days. The semiconductor company revealed that it saw more than RM 500 million (US$120.59 million) wiped out from its market capitalisation last week due to a decline in contracts and weak earnings, The Star has reported.

Globetronics market capitalisation slid from RM1.49 billion last April 22 to just RM1 billion last Friday, while its first quarter net profit also plummeted 78.5 per cent to RM3.6 million from RM17 million in the same period last year due to the declining smartphone sales.

Globetronics CEO Datuk Heng Huck Lee told StarBiz that "orders for the core sensor products of the group had dropped substantially in the first quarter." In addition, there also the "strengthened ringgit," which has "eroded" the company's margins.

The smartphone segment made up 45 per cent to 50 per cent of Globetronics's revenue for 2015.

A dip in profits, however, isn't stopping the Malaysian company from its plans to expand into the aerospace and medical device sector.

Globetronics is reportedly mulling the acquisition of a 323-hectare land in Penang, which according to Heng, is currently "in a very good position to attract fresh investments from the aerospace sector due to the surrounding electronic and electrical supply chain ecosystem."

The executive forecasts the aerospace industry to expand in the Asia Pacific over the next decade. The Airbus, in particular, will have a demand for 32,585 new passengers and freight aircraft by 2034 with a market value of US$4.9 trillion.

Penang is also an attractive investment destination for the medical device sector in Asia, but Heng said they "need to have the necessary land bank to draw these investments."

"It will be too late to acquire new land bank when investors come knocking on our door," Heng said, according to The Star.

The executive said majority of the investors prefer the island, which already has a cluster of medical device companies, than the mainland, but "if they cannot invest on the island, they would rather go somewhere else to invest."

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved