EG Industries Bhd, listed on Bursa Malaysia in 1992, has undergone significant transformations, particularly following the strategic shift initiated by its current chief executive officer (CEO) after 2014.
Initially focused on printed circuit board assembly (PCBA), which involves mounting electronic components onto a printed circuit board to create functional circuits, the electronic manufacturing services provider expanded its capabilities to include box build assembly.
The move has positioned EG Industries as a one-stop solution provider for its customers, driving the company’s revenue from RM100mil before 2014 to RM1bil today.
The shift towards box build assembly, which integrates housing with PCBAs to produce finished products, has been a game changer for EG Industries, according to group CEO Datuk Alex Kang Pang Kiang.
“We are a one-stop solution for customers. Box build includes plastic injection moulding, final assembly, and everything in between,” says Kang, who is also the largest shareholder, in an interview with StarBizWeek.
This expansion has not only diversified the company’s offerings but also broadened its customer base.
Initially reliant on Western Digital (WD), EG Industries counts on four key customers, each contributing equally to the company’s revenue.
WD remains a significant partner, but the scope of work has evolved from PCBA to full box build services.
In this regard, Kang says that the group produces 800,000 WD thumb drives every week which are distributed worldwide.
In 2018, EG Industries took a bold step by partnering with US-based Cambridge Industries Group (CIG) to produce box-build or full-assembly wireless and wired access routers and gateway products for CIG and residential markets.
“This is very important because CIG leads a lot of customers to come to see us,” Kang notes.
Following that, another milestone was achieved in 2022 with the first letter of intent (LoI) signed with CIG, which not only propelled the stock price but also set the stage for future growth.
This momentum continued with the signing of a second LoI in 2024, focusing on the production of next-generation 1.6T advanced high-speed optical signal transmitters and receivers for 5G wireless networks at EG Industries’ new Smart Factory 4.0 in Penang.
The latest deal includes the production of 800G optical modules, complementing the previously agreed-upon 100G, 200G, and 400G models.
Notable, Kang says EG Industries is CIG’s exclusive manufacturer outside of China, a strategic partnership that includes manufacturing and the transfer of technology and intellectual property for CIG’s photonics solutions.
The 1.6T photonics optical modules represent the industry’s latest advancements, enabling high-speed data transmission for automation and artificial intelligence (AI) applications in 5G wireless networks.
Growth plans
Commenting on this, Kang says EG Industries is poised for a major leap with its latest strategic initiatives, particularly focusing on 5G optical modules, which are critical for data centres and telecommunications infrastructure.
The modules, using linear photonic optical (LPO) technology, have revolutionised data transmission, making it more than 10 times faster than traditional methods.
“CIG developed the LPO technology, and today, many of our 5G optical modules utilise LPO, making data transfer significantly faster,” Kang adds.
He says EG Industries stands out in South-East Asia as the only company manufacturing 5G optical modules, setting it apart from competitors focused on other 5G products.
The company has secured contracts with data centres and is in discussions with potential partners to further expand its 5G optical module business.
Despite challenges posed by the Covid-19 pandemic, which forced the company to refine its strategies, EG Industries has continued to grow.
“The pandemic forced us to rethink our strategies,” he notes.
“We decided to move upstream and focus on 5G optical modules.”
This shift is expected to improve profit margins from 1% to 4%, although Kang acknowledges that achieving double-digit margins is challenging due to the volume-driven nature of the business.
Managing data traffic
As for data centres, network switches play a crucial role in managing data traffic efficiently.
These switches, which are consigned CIG, integrate with data storage components from WD to ensure the seamless operation of modern data centres.
Looking ahead, EG Industries plans to localise production of these network switches to reduce costs and remain competitive in the global market.
“We are going to localise production to bring the cost down and create more opportunities for our people,” Kang says.
Meanwhile, the latest addition to EG Industries’ strategic initiatives is the construction of a new smart factory, costing RM180mil.
Set to commence operations by October, this facility will support 5G optical module production and is expected to contribute about RM1bil to the group’s top line, doubling the group’s annual revenue to RM2bil.
In addition to its work with CIG, Kang notes that EG Industries is in discussions with a prominent Chinese company to explore the development of co-packaged optics (CPO) modules.
“The CPO technology is more expensive but offers advantages in specific applications, such as medical and advanced automotive uses,” Kang says.
“We are going to develop open AI modules to make use of all the data that we have. So, this is our roadmap,” he adds.
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