It seems one needs the endurance of a marathon runner to keep up with the electronics industry.
This is particularly true for Humphrey Leung Kwong-wai, the 54-year-old chief executive of semiconductor company Solomon Systech (2878), who said that rapid shifts in the industry compel companies to adapt fast.
Among the products that Solomon Systech makes are display driver integrated circuits and touch panel ICs for small and medium LCD displays. It also makes driver products for large displays such as LCD televisions, LCD monitors and notebooks.
In August, the company invested in an IC design company to explore the potential in the smart TV display market.
"Information technology is a very fast moving industry. On the positive side, it gives players in the industry plenty of room for innovation. On the negative side, the innovations are coming so thick and fast that it is becoming harder to catch up," Leung said.
And that makes the challenge even more daunting.
"The cycle of new technology is becoming shorter and shorter. The window for getting into the market is also getting smaller and smaller all the time. So, not only do we have to come up with new things, we also have to be the first in that is the biggest challenge for all companies in the industry," Leung said.
The good thing is the pie has become larger.
"Years ago, who would have thought phones with internet capabilities would be
used by the general population - from bosses of big companies
to housewives? So when certain phone applications are invented, such as cooking apps, we will have to come up with compatible components," he said.
Leung, an electronics engineer out of Hong Kong Polytechnic University, started his company in 1999, after immersing himself in the trade for about 20 years with stints in Silicon Valley and, most importantly, Motorola, and even returning to his alma mater for a doctorate in business administration to ensure he had the commercial skills to compete.
"Before 1999, companies often employed the vertical integration model, which means making a product from scratch - producing all its parts and then assembling them. In 1999, that all changed. The old model, all of a sudden, became not so competitive because of its limited flexibility. Older, bigger corporations began outsourcing some of their work to other smaller companies. Otherwise, they would have been eliminated from the market. This gave me a great opportunity to start my own company," he recalled.
That chance of a lifetime arrived for Leung at Motorola, where he was director of operations after a 16-year spell.
In the event, he did not just quit: he took with him many specialists. But the split was anything but acrimonious.
"I knew industry people well. So, I suggested to Motorola back then that perhaps it could try splitting some of the operations to be more flexible. That was the foundation for Solomon Systech, with all of us from Motorola being its core members," Leung said.
There were many challenges in the beginning.
"Think about it: bringing 33 experts, each with more than 10 years experience, to form a new company with no business at all it was nerve-wracking. Some of the members even had to chip in their money as capital to run the business," he said.
After six months, the financials became positive. Leung credits this to the system under which his company operates.
"We serve clients worldwide. They do not just look at our end products. More importantly, they look at the system under which the products were created. Say you come up with a great product. If you cannot replicate the conditions for others, you lack direction. Thats why, during our first meeting, the first thing we talked about is building up a good quality system. Our first job was to qualify for ISO 9001. This was when we did not even have one single product."
ISO 9001 is a certification of quality made by the International Organization for Standardization. The certification has to be renewed on a yearly basis.
"From 2000 until now, there has not been a single time when we have not been found to be in compliance with the system," Leung said proudly.
But consistent quality is only one factor in the broader picture. Many other factors can come into play in business, as was the case in the first half this year.
Net losses widened to US$5.18 million (HK$40.2 million) from US$3.94 million a year ago. Revenue slumped 28 percent to US$27.45 million from US$38.02 million.
The decrease in sales was blamed on lower than expected mobile display business unit sales, and a later than anticipated start of volume sales for new products resulting from a weakened demand from customers.
"Of course, it is disappointing for us. But it's also a matter of time before we recover," Leung said confidently.
Leung, who in 2001 won the Young Industrialist Award of Hong Kong, foresees more change in the electronics industry.
There are opportunities for Hong Kong companies to make components for internet-capable gadgets, such as smart phones, tablets and smart TVs. He said that although "no one makes smart phones, PCs or TVs" in Hong Kong, many small parts are needed for these platforms and that is where Hong Kong companies can seize the day.
Solomon Systech itself sees its future in the mainland, which already accounts for 20 to 30 percent of its turnover.
"It is quite different from overseas markets. Not only do we have to provide the products, but also a total solution for clients on how to incorporate our products into their business. So for us, we will have to enhance our customer support," he said.
Having experienced the ups and downs of the industry, Leung remains passionate about electronic components.
"I like to put my innovations where I can see them - in my products. My colleagues and I want to be a part of the exciting evolution of the industry."
Source:Thestandard