KUALA LUMPUR (Oct 26): JF Technology Bhd, via its wholly-owned unit JF International Sdn Bhd, is partnering with Huawei Investment & Holding Co Ltd’s unit Hubble Technology Investment Co Ltd (HTI) to set up a plant for the manufacture and supply of high-performance test contactors in China.
This confirms a report by theedgemarkets.com on Friday on the partnership with Huawei.
Through the proposed business collaboration, JF Technology will fortify its relationship with HTI as a key customer and strategic partner, as well as to gain market access into China, according to a filing with Bursa Malaysia today.
“The proposed business collaboration enables JF Group to establish a long-term synergistic business partnership with HTI where both parties will leverage on each other’s strengths,” said JF Technology.
JF International has today entered into a capital increase agreement and a shareholders’ agreement with HTI and its unit JFH Technology (Kunshan) Co Ltd for this partnership that serves to affirm its maiden step towards strengthening its presence in China, it said.
With the opportunity for JFH Technology to work closely with HTI to develop new test contacting technology for 5G and 6G networks as well as in the future, this will enable JFH Technology to move up the value chain of the semiconductor industry while developing local talents amongst Malaysians, it added.
Under both the agreements, JF International will subscribe US$500,000 cash in JFH Technology for a majority 55% stake, while HTI shall contribute US$1.5 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, said the company.
HTI is the venture capital arm of Huawei, which was incorporated in April 2019 and based in China. It has made various strategic investments in companies involved in semiconductors, chips, and AI, amongst others.
JF Technology said JF International will fund the subscription of the 55% stake through internally 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).
The proposed collaboration is also not expected to have any material effect on the group’s consolidated earnings and earnings per share for 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 Tech will fortify its relationship with Huawei as a strategic partner, as well as gain market access into China. This will also allow JF Tech to ride on China’s large-scale semiconductor localisation plan and capture the tremendous sales and incentives,” said JF Technology managing director Datuk Foong Wei Kuong, in a separate statement today.
“Furthermore, 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,” he added.
At the same time, Foong said JF Technology will also bring along its Malaysian partners in the semiconductor ecosystem to participate in the China market.