Categories: BusinessNews

JF Technology partners Huawei unit for manufacturing deal

by LYDIA NATHAN / pic by BLOOMBERG

JF Technology Bhd’s wholly owned unit JF International Sdn Bhd will partner Hubble Technology Investment Co Ltd (HTI), a subsidiary of Chinese smartphone giant Huawei Investment & Holding Co Ltd, to manufacture and supply test contactors in China.

In a filing to Bursa Malaysia yesterday, JF Technology stated that the proposed collaboration is aimed at establishing a long-term synergetic partnership with HTI and to gain market access to the world’s second-largest economy.

JF International signed a capital increase agreement and a shareholders’ agreement with HTI and its unit JFH Technology (Kunshan) Co Ltd to affirm its maiden step towards strengthening its presence in China.

The deal will allow JFH Technology to work closely with HTI to develop new test contacting technology for 5G and 6G networks and enable JFH Technology to move up the value chain of the semiconductor industry while developing local talents.

Under both agreements, JF International will subscribe US$500,000 (RM2.08 million) cash in JFH Technology for a majority 55% stake, while HTI shall contribute RM6.25 million for the remaining 45%.

The larger investment amount from HTI serves as a contribution-in-kind for the transfer of intellectual property owned by JF Technology.

From that contribution, RM1.7 million will be credited towards the increase of registered capital for JFH Technology, while the remaining RM4.5 million shall be credited to the capital reserve of the subsidiary.

JF Technology said JF International will fund the subscription of the 55% stake through internal generated funds. Thus, this collaboration will not have any effect on the group’s gearing position for the financial year ending June 30, 2021 (FY21).

Barring any unforeseen circumstances, the board expects the proposed business collaboration to be completed by the first quarter of FY22.

“Through this collaboration, JF Technology will fortify its relationship with Huawei as a strategic partner, as well as gain market access into China. This will also allow JF Technology to ride on China’s largescale semiconductor localisation plan and capture the tremendous sales and incentives,” JF Technology MD Datuk Foong Wei Kuong said in a separate statement.

“We believe we are the first Malaysian manufacturer of high-performance test contacting solutions to set up a manufacturing facility in China, providing us with the first mover advantage.”

“In turn, we will be able to develop our network to better serve our customers in China by reducing lead times and enhancing supply chain efficiency. We have identified Kunshan in the Jiangsu province as a potential location for our first manufacturing plant in China, which is also near to our major customers,” Foong said.

Trading in JF Technology shares was suspended by Bursa Securities yesterday, but will resume today at 9am. It last traded at RM4.80 last Friday.

Zukri

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