This article first appeared in The Edge Financial Daily, on November 2, 2015.

KUALA LUMPUR: The emergence of the Internet of Things (IoT), in which everyday objects have network connectivity to send and receive data, is transforming the way businesses are conducted, and little-known semiconductor design company Key Asic Bhd is readying itself to grab a bite of the estimated US$1.7 trillion (RM7.24 trillion) IoT industry.

It launched two main products last month: Its SPG1-01 chip (which has already been shipped to Lenovo Group Ltd and Toshiba Corp for their respective wireless cards) and the Wi-Fi micro secure digital (micro SD) card known as K-Card for WiFi-enabled electronic devices.

The K-Card is also touted to be the world’s fastest WiFi SD card today, and is capable of running at real-time programmable multiple-clock speeds of up to 200MHz.

Perhaps in anticipation of the launches, Key Asic’s share price rallied in early September, tripling from eight sen on Sept 4 to 24 sen on Sept 10. Last Friday, the stock closed unchanged at 20 sen, but was heavily traded with some 19.44 million shares done. In comparison, its trading volume was only averaging 774,976 shares in the last 200 days.

Key Asic is looking to launch two more products, the SPG1-02 chip and the K-Drive, a portable WiFi personal backup Universal Serial Bus (USB) device that can back up personal data even without Internet connection, to round up its stable of key products that could create an entire IoT ecosystem.

It is interesting to note that sovereign wealth fund Khazanah Nasional Bhd has a 20.7% stake in Key Asic — taken up since 2012 — while the company’s largest shareholder now is Key Asic Ltd, with a total stakeholding of 40.61%.

“The microchips (SPG1-01 and SPG1-02) we produce have the ability to offer online diagnostic services through the cloud for IoT devices or appliances, one of the areas that are fast growing,” Key Asic non-executive chairman and chief executive officer Eg Kah Yee told The Edge Financial Daily in an interview recently.

“Household appliances such as air conditioners, factory equipment or machinery, and hospital equipment or devices can all be connected to the cloud for regular online diagnostics on a regular basis.

“This means the manufacturers of the equipment can have real-time status of the usage conditions of the equipment deployed,” Eg explained.

“IoT devices need more than just a USB [slot and cable]. It needs WiFi or 3G or 4G connection to the cloud, and also an app-cloud platform, where customers can develop their applications [for both desktops and mobile devices],” he added.

As for the K-Card and K-Drive, with them, “users can now directly transfer data from their cameras to other devices, such as smartphones or laptops, for uploading to their social networking accounts or web storage”, said Eg.

The group estimated that about 50 million digital cameras are shipped a year. The two products will allow the company to tap into the digital camera market.

The local retail price of the K-Card is comparable to the prevailing market rate of micro SD cards, which is about RM140 per piece.

Meanwhile, Key Asic’s SPG1-01 chips are already being shipped to Toshiba for use in its TransferJet cards, and to Lenovo for the manufacturing of its Wi-Fi SD cards. Over the past two years, Key Asic shipped about 1.2 million pieces of the chip to the two tech giants. 

“We officially launched the K-Card last week (early October), while for the SPG1-02 and K-Drive, we will start shipping [them] by [the] end of the year,” Eg said.

Key Asic is also readying its K-Cloud, a cloud platform for IoT applications, to be offered to complete its full IoT solution range.

“This will greatly accelerate the time to market to our customers a total IoT solution offering,” he added.

Besides the information and communications technology sector, Eg said the group is also trying to push for its microchips to be used in medical devices approved by the Food and Drug Administration, such as Bluetooth blood pressure monitors, electrocardiograms, glucose meters and oximeters.

“The microchips can also be used in wearable devices for fitness and healthcare, which allow doctors to keep track of their patients in real time,” he said.

Financially, Key Asic, which sells its products locally and in Taiwan, narrowed its net loss to RM8.07 million in the six months ended June 30, 2015 (2QFY15) from RM9.37 million in the same period a year ago. 

Turnover improved 30.85% to RM9.24 million from RM7.06 million a year ago — with the Taiwanese market being its biggest revenue driver — primarily due to higher demand for its engineered products from both recurring and new customers.

The company has been in the red since FY10, with accumulated losses of RM30.22 million as at June 30, primarily due to research and development of the four products. With the launches, it expects to return to the black in the next financial year.

Going forward, Eg said the company intends to manufacture microchips that are low in power consumption to address the battery life issue, which has been a constant concern of smart device users.

“As we are moving into [the] IoT, evertything will be connected to the cloud. The battery life [issue] has remained a major concern. It would be inconvenient for users to keep looking for charging ports.

“We plan to develop an ultra low-powered microchip that is designed for the IoT, with [a] battery life lasting up to maybe six months with a single charge,” Eg said.

Key Asic’s last closing price of 20 sen gives it a market value of RM163.21 million, more than three times from just over a month ago.