Jahwa Electronics is planning to sell its camera module factory in Vietnam.
The company’s Chinese counterpart Sunny Optical has been chosen as the preferred buyer, people familiar with the matter told TheElec on Tuesday.
Jahwa build the factory at Vinh Phuc Province back in 2007. The factory has produced camera modules such as auto focus and optical image stabilizers.
The South Korean camera module maker has been a supplier to Samsung Electronics as of last year.
But the company has decided to exit the business in the first half of this year as it falls behind South Korean rivals such as Partron and Powerlogics in production capacity and profitability.
The factory it is planning to sell has a production capacity of 5 million units per month, the people said.
Sunny Optical will be positioned to better respond to orders from Samsung if it acquires the factory as it is only an hour and twenty drive from the South Korean tech giant’s smartphone factory at Bac Ninh Province.
The factory is also only an hour drive from Vietnam’s capital Hanoi.
Sunny will be able to expand its camera module production capacity to over 10 million units per month with the acquisition. The company is China’s second largest camera module maker after O’Film Group. It already has factories in Vietnam and India.
Jahwa is also selling some of the facilities in the factory to compatriot camera module maker Namuga. This negotiation and process is expected to wrap up within the third quarter.
Camera module makers need to have production capacity around 10 million units per month to win orders and supply for the top smartphone models of clients, the person said. A leading supplier, who took part in the development of a particular module for a smartphone, also takes the lion share of the profit compared to secondary vendors.
Jawha’s camera module business accounted for around 20% to 30% of its sales of the second half of last year, or around 40 billion won to 59 billion won.
By comparison, rival Cammsys secured 330.8 billion won in sales from camera modules in the same time period.
Jawha posted 14 billion won in operating loss and 128.1 billion won in sales in the first half of 2020. It stayed on the red and sales dropped 22.7% from a year prior.