TV maker Konka expanding into chip sector

Electronics manufacturer Konka Group Co Ltd is expanding into the semiconductor sector and increasing research and development investment, as it seeks the higher returns of the intelligent white goods segment.

The company's sales revenue is expected to reach 100 billion yuan ($15 billion) by 2022, according to Zhou Bin, president of Konka.

"We will focus on storage chips, internet of things devices and optoelectronic devices, and expand our presence along the whole semiconductor value chain, including design, manufacturing and raw materials in the future," he said.

The company reported revenue of 17.6 billion yuan ($2.6 billion) in the first half of 2018, an increase of 54 percent year-on-year. Its net profit was between 320 and 350 million yuan in the first six months, a tenfold rise compared with the same period last year, according to the company's half-year financial report.

In June, Konka spent 455 million yuan buying three subsidiaries from financially troubled refrigerator maker Henan Xinfei Electric Co Ltd, which is now marketed as Frestec. The move will enhance Konka's production capacity in white goods, such as refrigerators and washing machines.

Zhou said the traditional home appliance industry is still a pillar for Konka, emphasizing the company will continue to increase investment in R&D, as it plans to establish a footprint in emerging industries, such as artificial intelligence, smart manufacturing, new energy and next-generation information technology.

The Shenzhen-based company also wants to transform into a platform for content, apps and net-friendly hardware. Through mergers with internet companies, Konka is seeking to make its AI-enabled TVs capable of hosting varied content such as games, shopping, health and educational videos.

China sold 47.52 million television sets last year, down 6.6 percent year-on-year, the biggest decrease since 2003, according to a report from domestic home appliance market monitor All View Cloud. The market researcher attributed the sales drop to spillover from tightened property market management, rising component costs and the popularity of other gadgets with similar functions, such as smartphones.

However, AVC expects the TV industry to rebound this year, with sales ascending to 48.98 million sets, up 3.1 percent year-on-year.

"Konka has an advantage in the traditional TV sector, but it still lags behind its competitors, such as Haier and Midea, in refrigerators and washing machines," said Liang Zhenpeng, an independent consumer electronics analyst.

Liang said the overall gross profit level and overall profitability of white appliances is much higher than the TV industry, which is what attracted Konka to expand its presence in the sector.