SHENZHEN -- Nam Tai Electronics reported second-quarter net income slipped $200,000 from last year to $3 million as the EMS provider transitioned to higher volume, lower margin products.

Sales in the quarter ended June 30 were $147.7 million, up 29.7% from the same quarter of 2010. Gross profit fell 25.6% to $9.5 million, and gross margin decreased 480 basis points to 6.4% due to  product mix, higher labor cost, and startup costs related to the company's facility in Wuxi. Sales were down 8.7% sequentially on typical seasonality.

Lower gross margins resulted in operating income of $700,000 in the quarter, down from $3.8 million a year ago.

Year to date, the contract printed circuit board manufacturer's net sales are up 60.3% to $309.6 million. Net income is up 138% to $5 million.

A major expansion in Wuxi is pending final government approvals of acquisition of land use rights, and the company expects a resolution in the third quarter.

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