Component maker sees new demand lifting sales
AAC Technologies - a leading global supplier of miniature receivers, speakers, microphones, antennas and other components - is betting on new demand from Korean and mainland makers of smartphones and media tablets to help lift its business this year.
The Shenzhen-based company, formerly known as AAC Acoustic Technologies, expects to work more with Samsung Electronics this year and LG Electronics next year, while increasing its engagement with major mainland manufacturers such as Huawei Technologies, ZTE, Lenovo and TCL.
Richard Mok Joe Kuen, the chief financial officer and executive director at AAC, said the Korean companies had an opportunity to seize global share from perennial mobile-phone market leader Nokia, which is modifying its product line based on a strategic partnership with Microsoft to release devices that run on the Windows operating system.
'The Chinese manufacturers, meanwhile, are now more capable of designing higher-specification smartphones and media tablets that can compete with the international brands in many markets,' Mok said.
Hong Kong-listed AAC in May reported a 61.7 per cent growth in its first-quarter revenue to 970 million yuan (HK$1.17 billion), from 600 million yuan a year earlier, after gaining more component orders from established global smartphones brands and large mainland mobile phone manufacturers.
Its component products, which include mobile phone vibrators and camera optics, have also started to penetrate the fast-growing market segments for media tablets, e-books, game consoles and other portable multimedia devices.
According to a report by Morgan Stanley Research, AAC's top handset components customers last quarter were Nokia, Apple, Research In Motion (RIM), Motorola and HTC.
AAC's major customers in the media tablet space were Motorola and Dell, while Amazon.com's Kindle was its prime e-book account, the report said.
Mok said the company expected to further raise its profile in the media tablet segment following the global release of RIM's PlayBook.
While orders from Nokia were on the decline because of its transition to Windows-based devices, 'Apple should further trend up,' the Morgan Stanley report said.
A person familiar with the mobile components business said AAC was still being evaluated for qualification to supply components for the next versions of Apple's iPhone and iPad.
Mok, however, pointed out that AAC's immediate focus was getting more business from Samsung and later on, LG, as they stepped up efforts to boost worldwide sales of their smartphones and media tablets, which run on the Google-developed Android operating system.
'They will need to consider different high-specification [component] designs ... That puts AAC in a position to do more business.'
On the mainland, Mok said Huawei accounted for about 2 per cent of AAC's total business, followed by ZTE. AAC shares were down 3.91 per cent to close at HK$16.70 yesterday.