Cirtek’s first half profit up 45%

LAGUNA-based electronics manufacturer Cirtek Holdings Philippines Corp. grew its first semester net profit by 45 percent year-on-year to $3 million as it shipped out more products and improved operating margins.

Consolidated revenues rose by 24 percent year-on-year to $28.3 million, buoyed by sales from the RF (radio frequency)/microwave/millimeter wave business, Cirtek said in a press statement on Tuesday.

Applications for the millimeter wave technology include last-mile deployment for wireless communication, government security, medical technology, commercial space programs alongside satellite communication products for military and commercial applications.

Millimeter wave wireless technology presents the potential to offer bandwidth delivery comparable to that of fiber optics, but without the financial and logistic challenges of deploying fiber.

Gross margin ended at 19 percent in the first semester, two percentage points higher compared to 17 percent year-on-year. The improvement was attributed to the increased percentage of high-margin products sold for the period alongside continuing cost reduction programs.

Manufacturing activities continued to focus on improving assembly and packaging capabilities, operational efficiency, and reduction of unit manufacturing cost, the company said.

“The sales and marketing team has been expanded and re-structured for greater geographic reach and more effective coverage of current and prospective customers,” the company said.

Sales to Cirtek’s top 10 customers rose by 24 percent compared to the same period in 2014. In terms of revenue by application, Cirtek estimated that at least 50 percent of its output for the period went to communication, 20 percent to consumer electronics, 10 percent to computing, 10 percent to industrial and 10 percent to automotive segment.

The global semiconductor industry is forecast to grow between 5-8 percent this 2015, to be driven largely by the iPhone supply chain and automotive market, Cirtek said. Sales of android phones, tablets, PCs and TVs, are also expected to increase.

The global millimeter wave technology revenue market is expected to grow at a compounded annual growth rate of 45.09 percent, with a total potential market of $12 billion by 2020. The dramatic surge in wireless data traffic and need for wider network coverage are seen to require operators to make significant investments in the backhaul space.

“The company aims to expand its business portfolio vertically from OSAT (outsourced semiconductor assembly and test) company, to becoming a complex OEM (original equipment manufacturer), to the development of its own products and brands, with a focus on high-growth industry segments such as wireless communication and mobile devices and applications, and online and mobile solutions (i.e. e-commerce),” Cirtek said.

While majority of the company’s revenues are currently derived from its semiconductor and RF/microwave/millimeter wave businesses, Cirtek said it was planning to make “meaningful” acquisitions designed to gain expertise and access to proprietary software technologies and content, which in turn “will improve its capability in creating and providing e-commerce platforms and enterprise software solutions that are applicable to various industries, such as financial services, communications and retailing.”