GEORGE TOWN: Automated test equipment (ATE) manufacturer Elsoft Research Bhd is targeting to start the operations of its new medical device business by the first half of this year, says its group chief executive officer C.E. Tan.

For over the past five years, the group has spent several million ringgit to develop the control boards for renal care medical equipment.

“We will soon be able to deliver a few thousand control boards a year,” Tan told StarBiz adding that the control boards would be sold to both its multinational (MNC) customers in Malaysia and overseas.

Straits Research, in a report,noted the global hemodialysis market size is expected to grow at a 4.8% compounded annual growth rate (CAGR) between 2023 and 2031.

The international research firm has also pegged the market size to jump to US$136.84bil (RM583.4bil) in 2031 from US$89.85bil (RM383.3bil) in 2022.

“North America is the most significant shareholder in the global hemodialysis market and is anticipated to grow at a 4.5% CAGR during the forecast period,” it added.

Tan noted Elsoft has decided to diversify into the medical device-related business given the encouraging growth projection.

“Our medical device segment will start contributing to the group’s revenue this year, but the amount will be small,” he noted.

Tan, however, envisaged that contribution from this segment could increase by 10% to 20% in the next two to three years.

Meanwhile, the uncertainties in the smartphone market also made it necessary for the group to diversify in its effort to broaden its revenue base.

“The smartphone segment typically contributes 50% to the group’s revenue,” explained Tan.

The latest forecast by the Worldwide Quarterly Mobile Phone Tracker revealed that shipments of smartphones would decline 9.1% in 2022, a reduction of 2.6 percentage points from the previous forecast.

As a result, IDC expected smartphone shipment volumes at 1.24 billion units in 2022.

While a recovery of 2.8% is still anticipated in 2023, IDC has reduced its 2023 smartphone forecast by roughly at 70 million units, given the ongoing macroeconomic environment and its overall impact on demand.

“Elsoft also expects weaker demand for its automated test equipment as customers have postponed their capital expenditure due to supply chain disruption affecting their operations.“Although there are uncertainties, we are confident of the group’s prospects for the years ahead,” Tan said.

On a positive note, he said orders from the automotive lighting and general lighting markets, which contributed the remaining 50% of the group’s revenue were still healthy.

Based on a report by the Business Research Co, the global automotive lighting market size will grow to US$26.43bil (RM112.8bil) in 2023 from US$24.37bil (RM104bil) in 2022, at an 8.5% CAGR.

In 2027, the global automotive lighting market is estimated to grow to US$35.46bil (RM151.3bil) at a 7.6% CAGR.

According to Tan, Elsoft will also continue to develop new ATE and burn-in systems for the automotive industry this year.

Under the smartphone segment, he said the group would continue to develop new light- emitting diode or LED test and burn-in solutions for new smart devices.

For the first nine months of 2022, Elsoft posted RM11.6mil in after-tax profit on the back of an RM23.2mil revenue.

Tan added the group expected a slight single-digit percentage improvement in the financial year 2022 versus the performance of 2021.

Source: The Star

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