Mon, Dec 25, 2017 - Page 16 News List

Gemtek to acquire wireless supplier

THOSE WHO WAIT:The firm exepcts its efforts to build its cloud and IoT businesses to start paying off next year, with IoT expected to have the biggest gross margin

By Lisa Wang  /  Staff reporter

Telecom equipment maker Gemtek Technology Co Ltd (正文科技) on Friday said it plans to fully acquire wireless module supplier AMPAK Technology Inc (正基科技) for more than NT$955 million (US$31.87 million) to strengthen its hold in the Internet of Things (IoT) and cloud-enabled communication devices markets.

Gemtek said that its board has approved the purchase of 53.09 million shares of AMPAK at NT$18 per share from tomorrow to Feb. 12.

Gemtek, which makes set-top boxes and gateways, currently owns about 31 percent of AMPAK.

AMPAK trades its 83.69 million capital shares on the Taipei Exchange’s Emerging Stock Board.

“We believe the transaction will help speed up the company’s development of cloud-enabled and IoT products,” Gemtek spokesman Kevin Yang (楊正任) told a news briefing at the Taiwan Stock Exchange. “The synergy will be gradually reflected in the company’s increased revenue.”

As of Sept. 30, Gemtek had accumulated NT$2.5 billion in cash for expansion, it said.

Gemtek said its multi-year development efforts in cloud-enabled communication and IoT devices is to start bearing fruit next year.

Those products are to be the company’s major revenue drivers within the next two to three years, Yang said, adding that IoT products are expected to deliver a higher gross margin than others.

Gemtek’s gross margin fell to 13.47 percent in the first three quarters of this year, down from 15.41 percent during the same period last year due to higher component costs.

In a meeting with analysts on Nov. 21, the company said that gross margin for next year might remain flat, citing tight component supply into the first half of next year and telecom clients’ hesitation to pay more.

However, Gemtek is optimistic about long-range (LoRa) technology, the prevailing wireless platform for building IoT networks worldwide.

The company said it has deployed 230 base stations in Beijing using LoRa technology and has rolled out IoT applications in collaboration with Chinese partners. It expects to increase the number of LoRa-based stations to 500 next year.

In the first 11 months of this year, cumulative revenue totaled NT$12.54 billion, up 2.93 percent year-on-year, Gemtek said earlier this month.

For the coming year, Gemtek is expecting similar sales exposure to the telecom business as this year, higher contribution from set-top boxes and more shipments for IoT products.

Gemtek shares fell 0.2 percent to close at NT$25.1 in Friday trading on the Taiwan Stock Exchange.

Although the company is likely to see sales growth resume next year, its gross margin might remain under pressure.

This has been reflected in its stock price this year, which has increased 6.58 percent, trailing the broader market’s 13.87 percent over the period.

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