A man walks past an advertisement for an Apple iPhone 11 Pro at the Apple Store in IFC, Central district, Hong Kong, on Oct. 10, 2019. (Athit Perawongmetha/Reuters)
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Prominent Chinese company OFilm Group Co. Ltd., a manufacturer of optoelectronic components and former Apple supplier, released a notice on Sept. 27 saying Cai Gaoxiao, director and deputy general manager of the company, was placed under house arrest by local public security in Taizhou, Zhejiang Province.
The notice stated that Cai has submitted a written resignation, quitting all positions he held in OFilm, adding that at the present stage, the case appears to be Gao’s personal matter and has nothing to do with the company.
Cai is a shareholder of Glory United Limited, through which he indirectly holds about 8.73 percent shares of OFilm. Moreover, his brother Cai Rongjun is the actual controller of OFilm.
Cai Gaoxiao has worked for OFilm for 20 years, serving as deputy general manager and director of the company since 2002.
Coincidently, optoelectronic material producer Doti Micro Technology, a key business partner of OFilm, disclosed on Sept. 26 that one of its executives has been placed under house arrest by the same municipal police department. It is unclear whether their cases are connected.
Doti Micro Technology’s made a similar announcement, saying that Zhang Xiaobo, secretary of the board of directors and chief financial officer, was suspected of committing a crime and had been placed under house arrest.
In an updated notice released on the evening of Sept. 27, Doti said Zhang was suspected of engaging in securities market manipulation, and his case did not involve the company.
According to Doti’s official documents, OFilm was Doti’s biggest customer from 2018 to 2020. Sales revenue from OFilm was 36 million yuan (about $5.08 million) in 2018, 107 million yuan (about $15.04 million) in 2019, and 183 million yuan (about $25.72 million) in 2020, accounting for 26.49 percent, 37.76 percent, and 39.99 percent of Doti’s total sales revenues respectively in those years.
Founded in August 2002 as a manufacturer of infrared cut-off filters, OFilm became part of the Apple supply chain in 2016 through the acquisition of Sony Electronics South China Ltd. During its prime, OFilm received 11.7 billion yuan (about $1.6 billion) from Apple in fiscal 2019, accounting for 22.51 percent of total revenue for the period.
In July 2020, the Trump administration placed 11 Chinese companies on its list of export-controlled entities, including Nanchang O-Film Tech, a subsidiary of OFilm, for human rights violations in China’s far west Xinjiang region. Then in March 2021, after months of speculation, the company confirmed that Apple dropped it from the iPhone supply chain after a four-year partnership.
OFilm reported huge losses thereafter. Its net loss of 1.8 billion yuan (about $268.5 million) in 2020 was widened to 2.6 billion yuan (about $365 million) last year. In the first quarter of 2022, it reported a loss of 186 million yuan (about $27.8 million), and revenue fell 38 percent year-on-year, according to Chinese financial media Caixin.