KUCHING: Globetronics Technology Bhd’s (Globetronics) venture into the wearable devices manufacturing supply chain in particular the healthcare segment is in line with the strategy adopted by global technology companies and smartphone vendors such as Apple Incorporation (Apple), Samsung Group (Samsung) and Google.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) in a report said the move could be a timely approach in the wake of weakening growth in smartphone demand from mature markets.
Thus, the research firm believes the inflow of wearable devices would enable the company to counter the decline in growth of smartphone shipment.
MIDF Research noted the healthcare industry is one of the resilient industries during economy uncertainties as it is recession-proof and can generate sustainable margins.
The research firm explained that Globetronics’ venture into the healthcare wearable devices segment is viewed to be a safer approach given its nature of business.
Citing Globetronics chief executive officer Heng Huck Lee’s comment, MIDF Research noted he said, “There is a surge in demand for medical device outsourcing and contract manufacturers, as brand owners aim to cut down on production costs, particularly for high-volume and low margin devices,” he said.
Going forward, the research firm believes that Globetronics’ sensor segment, which has received strong demand for its bio and health wearable smart devices will provide a key earnings contributor to Globetronics group.
As for industry trend, MIDF Research observed that Apple is actively building a new team for the manufacturing of its new watch known as iWatch and other wearable technology.
Additionally, the research firm said the manufacturer of iPhone is also developing its sensor technology, where the sensors will be used to monitor health information for instance, blood-sugar levels and nutrition which is beyond the current fitness oriented devices available in the market.
For Samsung, the research firm noted the South Korea-based technology company is strengthening its effort in the healthcare sector with production of new personal wellness technologies.
It observed that Samsung has unveiled a reference design for a wearable called Simband, with the capability of tracking vital signs such as heart rate and blood pressure.
Apart from that, MIDF Research pointed out that Google had in June announced a new health-tracking platform known as Google Fit.
It noted the platform will integrate users’ health data from a variety of applications and wearable into one central location.
The research firm said the applications will track all of user’s health metrics such as sleep, steps and biking.
Among the notable sportwear manufacturers MIDF Research observed Google has partnered include Adidas and Nike to provide the service.
Thus, given the market potential and the characteristic of the defensive healthcare industry during times of economic uncertainties, MIDF Research believed that Globetronics’ venture into wearable devices supply chain is expected to boost its long term earnings growth.