Uchi Technologies Bhd, which currently supplies medical equipment to large European biotechnology companies, is boosting its biotech business.
Group managing director Edward Kao Te-Pei told StarBiz the group wanted to increase the revenue contribution from its biotechnology division to 50% from the current 20% over the next five years.
“To help achieve this goal, we will unveil the group's latest prototype device for the biotechnology industry in December,” he said.
Kao said the device was a control module used for testing the hardness of water – i.e. the calcium content in water.
“The device can be used in water dispensing machines, coffee makers and rice cookers.
“It will enable you to determine calcium content in water, so that corrective measures can be taken if the calcium content exceeds normal limits,” he said.
Kao said the device was normally used in medical laboratories.
“We believe there is a strong market for such a control module. That is why we are developing the prototype suitable for use in home electrical appliances.
“For example, we will target the control module at our customer, Jura, which is one of Switzerland's largest automated coffee makers,” he added.
Kao said the prototype control module would be exhibited at the 11th annual International IC China Conference and Exhibition in Shanghai next March.
He said the biotechnology division also produced the control module for weighing scales and centrifuge machines.
The control modules for weighing scales are sold to Sartorius, a German precision weighing scale manufacturer.
Eppendorf, a German biotechnology company, is Uchi's customer for the control modules used in centrifuge machines for sorting out fluids in medical laboratories.
“Under these two product categories, we have more than 10 different models,” he noted.
Kao said the group's biotechnology division was now doing research and development (R&D) to produce 10 to 15 models of control modules for wing scales and centrifuge machines next year.
“Our R&D department is currently developing a new range of control modules for automated coffee makers.
“This new control modules will have innovative features to suit the needs of modern living,” he said.
Uchi was targeting to introduce these control modules in early 2006, he added.
Kao said Uchi's plant in Penang was now running at full capacity round-the-clock. A portion of the group's work on control modules is outsourced to small- and medium-scale industries in the state.
“The excess work is outsourced to providers of surface mount technology services, auto insertion services and assembly services. The reason for outsourcing is to save in the cost incurred in acquiring additional machinery,” he said.
Kao said the group's plant in Dongguan, China, which produced control modules for semi-automatic coffee making machines, was also operating at full capacity.
The Dongguan plant contributes about 40% to the group's revenue.
Kao said Uchi spent about 7% of its revenue on R&D. “This year, we spent about RM5mil on R&D, compared with RM4mil last year,” he added.
He said investing in R&D was the group's primary competitive strategy. This allows it to reduce the time involved in designing the control modules and increase production efficiency, which leads to lower cost in the entire production process.
“Since our customers aim to be market leaders in their respective products, our ability to reduce the time cycle for new control modules and produce them cost effectively is important to them.
“This why we are able to continuously receive outsourcing work from major companies involved in making automated coffee machines and medical equipment,” he said.
To be able to launch successful R&D projects, the group also had to invest in retaining its team of experienced engineers. “Having a very attractive employee stock option scheme allows us to retain the core engineering staff with us for more than 10 years,” he said.
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