The 2003 severe acute respiratory syndrome (Sars) crisis persuaded Chuck Cheng to abandon a successful career in the United States and return to Hong Kong. The CEO of AppoTech attended some of the top universities in the US. He then spent 20 years in California's Silicon Valley, where he founded five start-ups and was a founding team member of Advancel Logic, which was later renamed and spun off into four companies that were sold for US$15 billion. Several of his product designs have US patents. Mr Cheng, winner of this year's SME Award, gave it all up in 2003 in a burst of civic pride. He wanted to contribute something to his hometown, where the economy was suffering from the ravaging effects of Sars. 'I was born in Hong Kong and this was an important factor in my coming back,' Mr Cheng said. 'In the Sars period, I thought I could do something to help the Hong Kong economy. I thought I could create some high-value-added and knowledge-based jobs in Hong Kong and [the] mainland.' AppoTech is a design company that develops high-performance, reliable and reasonably priced integrated circuits (ICs). Key applications include home appliances, electronic games, communications equipment, flash storage controllers, MP3 players and more. After returning to Hong Kong in May 2003, he hired three graduates from the Hong Kong University of Science and Technology. The four-man team worked on their first integrated circuit for about eight months. After finishing the design, they had a prototype done at a factory on the mainland. It was returned in June 2004. 'Fortunately, everything was okay,' Mr Cheng said. 'We then started working on applications and built a circuit around it.' The IC was suitable for low-cost mobile phones. Mass production began in October 2004. One million circuits were eventually sold and the company made a gross profit of US$2 million selling them. 'With this money, we were able to hire another 30 or 40 people and start work on our second and third chips.' Mr Cheng added. 'We now have 100 people and 20 chips. Our revenue this year has reached US$20 million. We are growing at a rate of about 500 per cent every year.' He credits the Hong Kong Science Park in Sha Tin with playing a key role in the company's breathtaking early success. Through its incubation programme, he was able to take advantage of a variety of subsidies. Included were free rent and access to expensive electronic equipment and computer software at a low cost. But there have been other factors contributing to the company's achievement. Key among them is being just a stone's throw from one of the world's most important manufacturing centres. 'Proximity to our customers - electronics manufacturers in the Pearl River Delta - really helps a lot because we can work closely with them,' Mr Cheng said. 'After the ICs come out, we can help our customers incorporate them into their finished products. We can send design and applications engineers to support them. This helps them a lot. It also speeds up our sales cycle.' AppoTech is what Mr Cheng calls a 'fabless' IC design company. By that, he means the company doesn't have any factories. 'We only do the sales, marketing and design,' he explained. 'We subcontract production to factories in Taiwan, Singapore, [the] mainland and Malaysia.' The advantages are easy to understand. 'Factories are very capital-intensive and labour-intensive, but the profit margins are not very high,' Mr Cheng said. 'As a 'fabless' company, we don't need a lot of capital. All we need are engineers, and we now have 100 of them - 10 per cent in Hong Kong, and 90 per cent [on the] mainland.' Looking to the future, Mr Cheng is full of optimism, and much of that can be attributed to the mainland's maturing electronics sector. The country has been the largest IC consumer since 2005. With annual growth of more than 30 per cent, it is also the world's fastest-growing IC market. Yet more than 80 per cent of its semiconductors are imported. 'I am very positive about our future,' Mr Cheng said. 'We still have a lot of room to grow. Right now, the market is dominated by chipmakers in the United States, Europe and Japan, but they are very expensive. So we have a great cost advantage.'