FoundPac moves into critical auto parts

TheStar Tue, Nov 17, 2020 09:11am - 5 months ago


Group chief executive officer C.H. Ong said the group had planned to start its automotive critical parts business this year, but had to postpone it to 2021 because of the pandemic.

George Town: Foundpac Group Bhd, with RM51mil in net cash as of June 30, will venture into the production of critical automotive parts business in 2021.

Group chief executive officer C.H. Ong said the group had planned to start its automotive critical parts business this year, but had to postpone it to 2021 because of the pandemic.

“The pandemic has slowed the demand for automotive parts and disrupted the production and exports in China and Europe.

“This has placed intense pressure on an industry already coping with a downshift in global demand, and likely to lead to an increase in merger and acquisition activity.

“For this reason, we are pursuing the manufacturing of automotive component business in 2021, ” he told StarBiz.

According to ReportLinker, a technology market research firm, the market size of global auto parts and accessories is expected to hit US$2.3 trillion by 2027, which translates to a 3% compounded annual growth rate (CAGR).

Ong said: “China, the world`s second largest economy, is forecast to reach a projected market size of US$474.8bil by 2027, growing at a 5.5% CAGR over the 2020-2027 period.

”Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 0.8% and 2.2%, respectively, over the 2020-2027 period.

“Within Europe, Germany is forecast to grow at 1.4% CAGR.

“The growth potential of the automotive parts business is enormous, which is why we are venturing into it.”

According to Ong, the group had invested in 2019 the machinery and equipment to manufacture critical automotive parts.

“We are in the process of applying for the IATF 16949 certification (a global technical specification and quality management standard) that will qualify the group as a first and second-tier producer of critical automotive parts.

“These are parts used in, for example, the steering system of an automobile.

“We expect to get the IATF certification in the first half of 2021 and start commercial production in the second half. We have already gotten the licence to produce automotive parts and components from the Ministry of International Trade and Industry

“We are talking with European and Asian carmakers and expect to conclude the negotiations in 2021 that would establish the group as a supplier of automotive components.

FoundPac has vast experience in manufacturing precision machining parts, ” he said.

According to Ong, the group will also expand its presence in the 5G telecommunication segment.

Foundpac produces test sockets and stiffeners that are attached to semiconductor test equipment to check integrated circuits used in a wide range of 5G hardware, electronic home appliances, consumer electronics, automotive infotainment, and semiconductor products.

Ong said the global 5G infrastructure equipment market is expected to recover by 2023 due to the pandemic.

“This year the 5G infrastructure equipment market is expected to decline US$1.9bil from US$2bil in 2019.

“The market is expected to recover by 2023. North America was the largest region in the 5G infrastructure equipment market in 2019.

“Asia-Pacific is expected to be the fastest growing region between 2020-2030, ” Ong said.

According to The Business Company Research report, the decline is mainly due to economic slowdown across countries owing to the Covid-19 outbreak and the measures to contain it.

“The market is then expected to recover and reach US$9.37bil in 2023 at a CAGR of 70.16%, ” the report added.






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