ATS to double revenue by next year
(01/19/2006 09:55 a.m. PST)

It will do so by modifying its business model and expanding into the North Asia market, reports NANDE KHIN

If all goes well, ATS intends to seek a listing the following year, CEO Peter Kevin said in an interview with BT.

ATS will be breaking into the Korea and Japan markets in the first quarter of next year. Mr Kevin said his company has recently obtained two major contracts to kick-start this expansion.

The contracts are with a Korean mobile phone maker ranked among the top three in the world. Mr Kevin did not name the company, but the description fits Samsung. Under the contracts, ATS will provide Bluetooth solutions for mobile phone applications.

'This is the first time we are doing business with such big companies for finished products,' said Mr Kevin, adding that the two projects together will generate revenues of at least US$80 million to US$100 million over the next 18 months.

ATS will be breaking into the Korea and Japan markets in the first quarter of next year. Mr Kevin said his company has recently obtained two major contracts - with a Korean mobile phone maker ranked among the top three in the world - to kick-start this expansion.

'The products have been designed . . . We are now at the approval stage. Once they get approved we can start selling in Korea,' Mr Kevin said. And once ATS's Korean office is running smoothly, it will take care of the Japan market as well, said Mr Kevin.

Revenue from North Asia

The Korean entrepreneur, who is now a Singapore permanent resident, used to work for the Samsung office in Singapore before setting up ATS in 1999.

Other than Bluetooth and other mobile phone application products, ATS also designs integrated circuits (ICs) and develops flat-screens.

The Singapore-based company has operations in China and Hong Kong as well and earlier this year, expanded into Malaysia. Singapore and Malaysia are, at present, its biggest markets. 'But from next year, North Asia's contribution to revenue will be much bigger than the current revenue,' said Mr Kevin.

He declined to reveal specific figures for ATS's revenue and profit last year but said that this year's revenue is expected to be a 10 per cent increase from last year, while net profit is expected to be a 70-90 per cent jump from last year.

'We have already hit last year's profit during the first half of this year,' said Mr Kevin. He added that next year's revenue will be 'conservatively speaking, almost double this year's'.

This will be a result not only of the new contracts and expansion into Korea and Japan. The shift in ATS's business model - which was implemented earlier this year - will also play a large part, said Mr Kevin.

ATS used to design, develop, test and even market its products from start to finish. Now, it will outsource certain aspects so as to accelerate the time to market for products.

'We are not going to do manufacturing; we are using third party solutions from EMS (electronics manufacturing services) providers. We will concentrate on development and marketing.

'We are professionals for electrical engineering but we are not professionals for mechanical engineering; we are not professionals for ID (industrial design).'

Mr Kevin said that although ATS now has to pay for professionals for certain services like EMS, ultimately it will benefit the company as the time-to-market can be cut by several months.

And in the electronics business, timing is everything. Mr Kevin said that ATS had learned its its lesson in the past when it had experienced an 'unsuccessful case of doing everything ourselves'.

He said: 'As an SME, we had limited resources and we also had to compete with much bigger players. As a smaller company, we have to prepare two to three generations (of products) ahead. So time-to-market is everything.'

Another change in direction for ATS is in its IC design business. Previously, the company designed different circuits according to customer specifications. But now, in order to maximise its resources such as manpower, ATS only designs ICs that will have relevance to its other products.

'So if an IC designed is not related to our system development products, we are not going to do it.' ATS now designs ICs that it uses in its products as well as sell to more than one manufacturer.

Such a business strategy, which ATS also employs in its digital TV display solutions, also has another advantage of allowing ATS to concentrate on innovations that can be patented. So far, it has filed a patent for an IC and the patent will be probably be awarded in the first quarter of next year, Mr Kevin said.

Focus on TFT development

'This time, the patent is for IC design but next time, it may be for our display solutions.' ATS's digital TV display solutions is a business whose focus has also been recently shifted from big (flat screen) displays to small displays.

'In terms of market size, the market for small-sized displays is much bigger. The market is quite niche and its is very suitable for an SME like us to handle. For big displays, we have to compete with big players like Samsung and Panasonic. And eventually, we just can't (compete),' Mr Kevin said.

The company used to develop big PDP screens but will now focus on developing smaller TFT (thin film transistor) screens. And coupled with ATS's new strategy of outsourcing activities, the time to market for its display products have been shortened dramatically.

Previously, its PDP screens took two to three years to develop. Now, it can develop its TFT screens in three to five months.

ATS also plans to develop a comprehensive set of car infotainment applications in the next five years and already has the raw map to do so, Mr Kevin said.

Come 2007, ATS is looking to list. 'But to be frank, next year is key for us to make it happen, because of the much higher profit we expect next year,' Mr Kevin said.