Hoping to tap into growing markets for camera phones, Chinese electronics molder Yorkey Optical International plans a significant expansion of its plastics capabilities, after it raised $56 million in an initial public offering on the Hong Kong exchange.
The Dongguan-based company, which is partly owned by Taipei, Taiwan-based electronics manufacturing firm Ability Enterprise Co. Ltd., said it plans to pour almost half of the money raised in the Feb. 10 IPO into plastic processing and mold making.
Along with that, the company said it wants to expand its research and development capabilities to collaborate with customers on product development and meet international requirements.
Yorkey is facing increasing competition from other Chinese makers of parts for digital still cameras, and said it wants to adopt ISO 14000, beef up quality control and add enterprise resource planning software to continue going after more profitable markets.
``Domestic players who compete fiercely with each other are often focused on low-end and low-margin products,'' Yorkey said in filings with Hong Kong regulators. The company said it expects more of the market for manufacturing optical electronics to shift to China.
Beyond the investment by Ability Enterprise, which owns about 25 percent of Yorkey, digital camera maker Asia Optical Co. Inc. of Taipei owns 5 percent of the firm.
Along with digital cameras, which make up the largest part of its business, the company supplies plastic and metal parts for copiers and other electronic items, such as camera phones. It's seen sales grow from $41.3 million in 2002 to an estimated $77 million in 2005.
Yorkey told regulators it will spend the largest share of the proceeds, 36 percent, on improved plastic molding at its Dongguan factory, with the second-largest chunk going to improved mold making capabilities.
Yorkey said it has 128 injection molding machines and plans to boost capacity at least 25 percent.
The company said its mold-making operations, which have grown from $1.4 million in sales in 2002 to an estimated $8 million in 2005, are a key part of its strategy because they let it respond more quickly to market trends.
The company said it also wants to expand into other areas of the optical market, with an emphasis on plastic and metal components for camera-equipped handsets.
Yorkey said the worldwide digital camera market is projected to grow from 73.7 million units in 2004 to 92.7 million units in 2006, as people replace film cameras with digital ones. A dip to 81.6 million units is expected by 2009.
Mobile phones with cameras, on the other hand, are expected to grow from 270 million units in 2004 to 766 million units in 2009.
Still, Yorkey said that contrary to predictions, camera phones will not replace stand-alone digital cameras, because of the relatively poor image quality in camera phones and the telecom industry's focus on other profitable add-ons, like video capture, rather than still-image capture.