The chemicals firm has amassed stakes in firms that will gain from the technology
At a time when many are sceptical about the prospects of third-generation (3G) mobile services, a local chemicals company serving the electronics industry is betting on its eventual take-off.
Kingboard Chemical Holdings - the world's largest maker of laminates by production capacity - has quietly amassed stakes in firms that manufacture printed circuit boards (PCBs), a key component of electronics products. '3G may not look good now, but it is a technology that is bound to be here later,' said Kingboard chairman Paul Cheung Kwok-wing.
He expects 3G to take off in two years and transform the prospects of the PCB industry, which has been suffering the effects of a three-year downturn.
Mr Cheung said the PCB industry's mild recovery this year would be short-lived, with the real boom coming in 2005.
Kingboard's PCB businesses accounted for 22 per cent of its total turnover in the first half of this year, but only 13 per cent of earnings before interest and tax due to high plant start-up costs. Excluding such costs, PCB profit margins were also eroded by higher material costs.
Last month Kingboard made an offer to buy PCB-maker Suwa International Holdings, which gets half its turnover from the mobile-phone industry. Suwa made a net profit of only $3 million on turnover of $182 million last year.