SINGAPORE - Mainboard-listed precision engineering firm AEM Holdings is acquiring Smartflex Technology (SFT) and Smartflex Innovation (SFI) for $26 million, it said on Sunday.

SFT is an outsourcing assembly and test company for smart card modules used in banking, while SFI has developed proprietary manufacturing equipment, processes and intellectual property for producing very low cost SIM card modules for telecommunications and smart card modules for banking.

AEM said it believes that the investment can provide both immediate and long-term benefits to the company and its shareholders.

The move will diversify its business risk away from the cyclical semiconductor industry and also lowers AEM's business concentration, as it now has only one key customer.

AEM has identified potential business synergies with SFT and SFI, it added, related to the provision of customized equipment to support SFT's and SFI's sophisticated precision manufacturing process and the shared interest of both companies in complex precision manufacturing.

Furthermore, SIM and banking smart cards are a large, global, growing market. SFI and SFT's core products represent growing businesses, AEM said.