Automation firm looks at RFID tech
Company expects 10% to 20% growth over five years
UNDER the current challenging market, automation specialist Sin Yen Technologies Sdn Bhd will continue to invest into selected growth products to boost sales, albeit at a minimal increase.
“We will allocate resources to expand the segments with growth potential. One such area is the business radio frequency identification (RFID) coils used in RFID tags, readers and labels,” says director Tan Sin Hong.
Tan notes that the team would be happy if the company is able to achieve moderate growth of 10% to 20% over the next five years.
“We are a small company with limited resources, so we need to move forward with great caution, especially with the prevailing tough times. If our top and bottom-line can improve by 10% to 20% yearly, we are contented,” he says.
Sin Yen makes an annual revenue of about Rm5mil, and its profit is about 10% to 20% of the turnover.
Tan thinks that this target is fairly realistic.
Sin Yen aims to tap into the growing RFID market as companies look to modernise their tracking capabilities.
According to Idtechex, a Uk-based market research house, the total RFID market will increase to Us$13.4bil (Rm56.06bil) in 2022 from Us$11bil in 2018.
“For this reason, we have recently started producing automated integrated production lines for electronics manufacturing service (EMS) providers to manufacture RFID coils. The RFID coils are used in tags, readers, software and services for RFID labels, cards and fobs.
“The global RFID tags market is mainly driven by the growing demand for accurate location reporting industries such as logistics and transportation, retail and healthcare.
“RFID tags are a modernised version of the barcode and can be attached to any object for the purpose of identification and tracking. The added functionality of RFID tags over barcodes has made them popular in a number of end-use industries as barcodes do not provide tracking and location reporting services,” he says.
Additionally, the growing demand for Internet of Things (IOT) technology is likely to make the incorporation of RFID tags easier across the industrial spectrum, leading to steady growth of the global RFID tags market over the forecast period.
The growing logistics and transportation industry is also likely to be one of the major drivers for the global RFID tags market.
Tan says the growing demand for long-distance shipping of packaged items has led to the need for accurate tracking, which has led to a growing demand for RFID technology.
“The automotive segment, an important contributor to our revenue and profit, is another area in which the company can consider expansion into,” he adds.
However, the automotive industry is expected to be weak for 2019.
According to Moody’s Investors Service, global automobile sales are projected to fall 3.8% in 2019 and 0.9% in 2020 due to weakened demand in China and Western Europe.
“The automotive industry, however, is expected to rebound in 2020 for certain emerging markets.
“According to Moody’s, in India, we can see auto sales swing to a 3% decline in 2019, from the strong growth of 8.4% in 2018, before rebounding 5% in 2020. In Russia, Moody’s expects to see a 3.8% decline in Russian auto sales before a 3.5% rebound in 2020.
“For Moody’s, Japan is the only major auto market where annual sales are likely to increase, albeit at a moderate pace,” Tan says.
So far, Sin Yen’s automotive business segment has not been affected.
“Because of the anticipated recovery in emerging markets in 2020, we can explore developing integrated production lines to produce those electronic components that will be demanded in the near future,” he says.
Presently, the company’s core business is in making automated integrated production lines to produce inductors, which generates 80% of the group’s revenue.
“Inductors, passive components that do not require an external source to power its operations, are used in automobiles, military equipment and consumer electronic products such as refrigerators, televisions, washing machines and modems that interconnect with IOT products.
“Because of the wide applications of inductors, this business segment cushions the company against the impact of the slowdown in the semiconductor and electronics industries,” he says.
According to Tan, he and his partner, Chen Yen Hong, who is the managing director, started the business 18 years ago, not too long after the Asian Financial Crisis.
“Each of us forked out RM10,000 to start the business. We were able to keep the initial capital layout low because we had support from our customers,” he shares.
To keep its overhead low, Sin Yen only designs and assembles the production lines and testers.
“We outsource the manufacturing of the components to metal and precision tooling SMES.
“Our customers are largely overseas multinational corporations (MNCS). About 20% of the MNCS are based in Penang.
“Thus our earnings are mainly in US dollar, which offsets against the higher cost of imports,” he adds.