Creative Tech: Business environment has become ‘more uncertain’

Creative Technology's Sound Blaster product. Credit: Creative TechnologyCreative Technology's Sound Blaster product. Credit: Creative Technology

Creative Technology, in responses to shareholder questions before its annual general meeting, said Wednesday the macro business environment has become even more uncertain than it was in the cautious Chairman’s Message in its annual report, about a month ago.

“Many of our previous plans and strategies are up in the air and need some serious rethinking. We assure our shareholders that we are doing our utmost to get a handle on the situation, in the hope of finding opportunities amidst the turmoil,” Creative Technology said in the statement filed to SGX Wednesday.

On Wednesday, the company said both companies and nations were facing “challenging times,” and Creative Technology was “not immune,” with the situation potentially affecting its efforts to capitalize on its Super X-Fi products.

“This type of scenario will be more challenging for new and upcoming technologies to gain widespread adoption. Super X-Fi, as a relatively new technology, faces the same strong headwinds,” the company said.

Creative Technology said Super X-Fi has “a lot of potential for licensing,” but headphone spatialization is at “early days” and the current market turmoil has made it more difficult to reach deals.

The company said accessibility has been “severely restricted,” particularly for its biggest potential market, China.

In the Chairman’s Message in the annual report, Sim Wong Hoo, who is both chairman and CEO, had pointed to the uncertain pace of recovery from the Covid-19 pandemic and the spread of the Delta variant as increasing the level of uncertainty.

“In addition, market conditions have become more challenging in light of the supply chain disruptions caused by the global shortages of semiconductors, delay in shipping schedules due to port congestions and shortage of containers, and the skyrocketing increases in freight costs,” Sim said in the annual report. “The group has begun to face shortages of certain products due to component unavailability, with spike in prices of some components, and has also experienced more frequent shipping disruptions.”

Sim said at the time that these factors would have an impact on Creative Technology’s results for this year.

In response to questions about the length of service of the company’s independent directors, Creative said its nominating committee believes independence should not be determined solely by length of service, but also on their experience and expertise.

The company pointed to independent director, Lee Kheng Nam’s experience. Lee is currently a venture partner of GGV Capital, as well as chairman of investment holding company Advantec, deputy chairman of Vertex Venture Holdings, which is a wholly owned subsidiary of Singapore state-owned investment company Temasek Holdings, the statement said.