(Yicai Global) Feb. 8 -- Shares in Wingtech Technology soared by the exchange-imposed limit of 10 percent today on the news that the leading Chinese smartphone contract manufacturer will buy the camera module manufacturing assets of Ofilm Group which was struck off from US tech giant Apple’s supply chain last year.

Wingtech’s stock [SHA: 600745] surged to CNY110.35 (USD17) while Shenzhen-based Ofilm [SHE:002456] closed up 2.36 percent at CNY10.40 (USD1.61).

The duo only referred to the “operational assets pertaining to the camera business for an overseas client” in their statements yesterday and did not mention Apple.

Last month, Ofilm announced that it was planning to sell four subsidiaries, including its biggest earner Guangzhou Delta Imagining Technology, part of the firm’s compact camera module business and camera module supplier to California-based Apple. The plant was bought by Ofilm in 2017 for USD234 million from Japan’s Sony.

The pair determined the value of Delta Imaging to be 10 times the unit’s profit from overseas sales last year. In the first half of last year, Guangzhou-based Delta Imaging contributed a third of Ofilm’s profit. This amounted to CNY270 million (USD41.8 million) in the nine months ended Sept. 30, the statement said. No further pricing specifics were given.

Last July, the US Department of Commerce put 11 Chinese companies, including Nanchang O-Film Tech, in which Ofilm owns 49 percent, on its list of entities subject to export controls, imposing new restrictions on their access to US-made goods and technologies. Since then, Ofilm’s stock price has more than halved and it has lost its Apple contract.

The deal does not include the blacklisted unit, a company insider told Yicai Global.

Ofilm’s camera business was the backbone of Apple’s industrial chains in China, said Li Gang, an analyst at Beijing-based Sino Market Research. By acquiring all of Ofilm’s camera-making assets, Wingtech stands a good chance of becoming a supplier to Apple, he added.

Cameras are key components of smartphones, the Internet of Things devices, smart vehicles and other new appliances, Li added. The sector boasts huge potential and future market opportunities.

The acquisition will enable Wingtech to expand its traditional business of integrating downstream products with upstream electronic components to serve the entire industrial chain, Li added.

Editors: Tang Shihua, Kim Taylor