Yorkey Optical International, which supplies Nikon, Canon and Olympus with phone and camera parts, said its gross margin would stay above 30 per cent this year as it tries to boost sales and net profit. Yorkey's gross margin was 40 per cent for the six months to June compared with 38 per cent for the same period a year earlier. 'We will not only focus on gross margin but will increase our production scale and diversify our product mix to improve the bottom line,' said executive director Iris Wu Shu-ping. She said Yorkey probably would keep its gross margin at more than 30 per cent as in the past few years. Taiwan-based Yorkey is looking to benefit from increased demand for digital cameras as new products such as Apple's iPhone boost consumer interest. The firm does not yet supply Apple which targets 1 per cent of the mobile phone market next year after its iPhones go on sale this year. Global demand for digital cameras surged to about 90 million units last year from 70 million in 2004, said International Data Corp. Yorkey's first-half turnover dropped 10 per cent to US$34.53 million last year as more digital camera makers than usual delayed making contracts until the second half, a period of highest demand. The firm, which raised HK$400 million in February last year before listing in Hong Kong, posted a 3.7 per cent gain in first-half net profit to US$10.37 million as interest income rose about US$2 million. Digital camera components accounted for about 63 per cent of first-half sales with the rest contributed by camera phones, printers, computer peripherals, traditional film cameras and telescopes. Components for camera phones grew to 8.4 per cent of total sales in the first half of last year compared with 3 per cent in 2004. Ms Wu said total sales last year, which will be reported in April, grew from US$78.8 million in 2005 after Yorkey invested about US$7 million on enlarging production capacity 30 per cent in the second half. Yorkey, whose production is based in Dongguan, Guangdong province, will invest US$10 million this year to further boost capacity. Ms Wu said the firm was not planning to set up plants in the Yangtze River Delta to get closer to its Japanese clients. EVA Precision Industrial Holdings, a Shenzhen manufacturer of components for printers and photocopiers, last year set up a factory in Suzhou, near Shanghai, to get closer to its Japanese customers such as Konica Minolta, Toshiba and Canon which accounted for 84 per cent of its sales. The new plant increased the company's capacity 40 per cent. 'Japanese firms were keeping 50 per cent of their factories in their home country a decade ago, but now 90 per cent of them have moved to China,' EVA chairman Cheung Kit said last year. 'I believe more production processes will be outsourced to Chinese firms.' Yorkey paid out US$5 million or half of its net profit as special dividend in August. Ms Wu said: 'We will try our best to maintain our dividend policy at about 50 per cent of our net profit.' The shares fell to HK$2.325 on June 22 after surging 64 per cent above their HK$2.20 offer price. They have since recovered to HK$2.66 including a 2.3 per cent gain yesterday.