EG Industries Bhd has signed a second letter of intent with US-based Cambridge Industries Group (CIG) to produce the next-generation 1.6T advanced high-speed optical signal transmitter and receiver for 5G wireless networks at EG Industries’ new Smart Factory 4.0 in Penang (PG2).

In a statement, EG Industries said the 1.6T photonics optical modules represent the industry’s latest advancement, enabling high-speed data transmission in 5G wireless networks for automation and Artificial Intelligence (AI) applications.

EG Industries is CIG’s exclusive manufacturer outside of China, in a strategic partnership for the manufacturing and transfer of technology and intellectual property of CIG’s photonics solutions.

Additionally, the latest LOI includes the production of 800G optical modules, complementing the previously agreed 100G, 200G, and 400G models in the first LOI in 2022.

The production will take place at EG Industries’ existing facilities in Sungai Petani, Kedah, and the newly built Smart Factory 4.0 which is scheduled to commence operations by the second half of 2024.

Source: The Star

EG Industries expands partnership with US-based R&D firm

The Malaysian Rubber Glove Manufacturers Association (Margma) is optimistic that global demand for rubber gloves will rebound in 2024.

It sees demand surging to 450 billion pieces by 2027 despite the demand dropping to 307.2 billion pieces in 2023.

The association said the trajectory is driven by increased demand in key markets such as the United States, the European Union and Japan, as well as the expanding usage of gloves in non-medical sectors post-Covid-19, including hotels, restaurants, cafes, semiconductor industries, and others.

“The Malaysian Rubber Council (MRC) expects the surge in demand and stands ready to support the industry in achieving its growth targets.

“Collaboration and shared insights will be critical in navigating both local government priorities and international demands,” Margma said in a statement.

Margma president Oon Kim Hung said the global demand for rubber gloves has experienced fluctuations, yet commitment to delivering high quality gloves for the world remains steadfast. “We must prioritise fairness, transparency, and sustainability in all our practices and in particular our pricing practices,” he said.

He said some of the biggest challenges that persist, include the low average selling prices (ASP) and oversupply issues but this does not mean the Malaysian rubber glove industry players should bend on their ethical practices to counter the stiff competition from regional players.

“We can look to other means of addressing competitiveness where we are seeking government support in various matters. We have appealed to the government for the immediate removal of this export cess, to enable the industry to overcome current challenges and enhance its global competitiveness in the post-pandemic era,” he added.

Margma advocates for streamlining policies such as the Gas Supply Agreement (GSA) and the immediate removal of the export cess to enhance industry competitiveness.

He said for over two decades, the rubber glove industry has been burdened with a 0.2 per cent export cess, amounting to over RM500 million in payments.

“In our most prosperous years, this cess accounted for up to two per cent of our gross profit margin.

“However, given the current economic climate, with the Average Selling Price (ASP) falling below production costs, the industry continues to incur losses on every exported container,” he added.

Margma is calling for all industry players to advance prioritising environmental, social, and governance (ESG) standards to secure the industry’s future.

At the same time, Oon said the association is actively engaging in collaboration with MRC and the Malaysian Rubber Board (MRB) to support members in improving their ESG scorecards and adopting sustainable practices as well as digitalisation in alignment with the Madani government’s call.

“In collaborating with MRC, MRB, and the Malaysian Productivity Corporation (MPC) to implement the ‘Malaysia Sustainable Natural Rubber’ initiatives, we should also ensure that it includes ‘Green Gloves’ and other eco-friendly glove options. These efforts underscore our commitment to sustainable practices and environmental stewardship,” he continued.

Oon said the association members are fully committed and have made substantial progress towards compliance with the EU Deforestation Regulation (EUDR) and Corporate Sustainability Due Diligence Directive (CSDDD) of European Union countries. 

Source: Bernama

Margma confident global demand for rubber gloves will rebound in 2024

Switzerland-based electrical measurement technology specialist Life Energy Motion (LEM) unveiled its new RM78 million state-of-the-art manufacturing facility in Penang on Friday.

Situated at Penang Science Park, the plant is aligned with LEM’s growth strategy, which is driven by the increasing global demand for its core products, including current and voltage sensors. This demand stems from the imperative of decarbonization across sectors such as automation, automotive, traction and renewable energy.

As part of its expansion plans, LEM aims to grow its current headcount of 70 people to over 200 by March 2025, with projected sales from the factory exceeding Swiss francs 200 million (RM1.05 billion).

Penang Chief Minister Chow Kon Yeow expressed delight that LEM has chosen to invest not only in the region, renowned for its supply chain resilience and well-developed ecosystem, but also in the acknowledged expertise of its people.

Meanwhile, Sikh Shamsul Ibrahim Sikh Abdul Majid, Chief Executive Officer(CEO) of MIDA, praised LEM’s integration of advanced manufacturing technology and sustainability in its new Penang factory, highlighting it as evidence of Malaysia’s appeal as a prime investment destination.

“This milestone not only propels Malaysia towards a more environmentally conscious future but also fosters collaborations driving technological innovation, economic prosperity, and sustainable development for Malaysia and beyond,” he said.

LEM’s CEO, Frank Rehfeld, emphasized the importance of investing in cutting-edge facilities to produce top-notch products for various fast-growing markets, particularly in uncertain times.

“It is crucial for LEM to increase its resilience and enhance customer service by investing in advanced production facilities and skilled personnel capable of manufacturing the best products to meet the demands of this growing sector,” he added.

Source: The Edge Malaysia

Swiss firm Life Energy Motion inaugurates RM78 mil plant in Penang

Automotive electronic parts manufacturer MCE Holdings Bhd has commenced the construction for its MCE Auto Hub, the company’s new manufacturing facility in Serendah, Selangor, with an initial investment of RM50 million for the first phase of the development. 

MCE group managing director Dr Goh Kar Chun said upon completion, the hub will serve as MCE’s primary production facility, bolstering its capacity to meet the growing demand for electronic components and systems in both internal combustion engine (ICE) vehicles and electric vehicles (EVs). 

“The investment signifies our aim to lead in supplying automotive electronics and mechatronics parts in the region, capitalising on Malaysia’s advantage and its highly established electrical and electronics (E&E) industry, enhancing our capacity in supplying sophisticated products that are designed, produced, and made in Malaysia,” he said during the construction commencement ceremony on Friday. 

Goh said the plant will seek to address the evolving needs of next-generation automobiles, particularly in advanced automotive electronics such as cockpit infotainment systems, digital displays, and various components for both ICE vehicles and EVs.

Furthermore, Goh noted that MCE is committing a further investment of RM150 million to RM200 million over the next 10 years in the new manufacturing facility to ensure the company remains competitive to support the government’s aspiration to become a regional leader in manufacturing, engineering, technology and sustainable development in the automotive sector, as outlined in the National Automotive Policy 2020 (NAP 2020).

Construction for the first phase of the new plant is expected to be completed by the end of the year, with operations slated to begin in 2025.  

MCE’s net profit in the second financial quarter ended Jan 31, 2024 (2QFY2024) rose marginally by 6.4% to RM4.52 million from RM4.25 million in the previous year, mainly due to an increase in demand for the group’s products from its customers.

Quarterly revenue inched up 2.3% to RM40.05 million from RM39.13 million.

Shares of MCE were down one sen or 0.65% to close at RM1.52 on Friday, with a market capitalisation of RM187.81 million. However, the counter has risen 56.7%, or 55 sen, over the past year. 

Source: The Edge Malaysia

MCE Holdings commences construction for RM50 mil manufacturing facility in Serendah

As Malaysia attempts to move away from the back end of the semiconductor supply chain production and towards the higher end of the spectrum, Second Finance Minister Amir Hamzah Azizan reportedly said that Malaysia is not worried about the competition from the United States and China.

He was quoted by the American network CNBC saying Malaysia does not foresee a rivalry forming with the duo since it would be offering a different value proposition by not going for the topmost end of semiconductor chips.

“The semiconductor space is now in the upcycle — and Malaysia will be a beneficiary of that. I think the reality of it all is, there is enough growth that will go around. So, everybody will get some pickups on that one.

“I think where Malaysia competes in, we’re not going to go head-on to the tail end of the high-end competition, where maybe the US is bringing all the parts. Therefore, I don’t think it’s a big challenge for us,” he told a CNBC reporter at the International Monetary Fund spring meetings in Washington.

As geopolitical tensions arise, he said Malaysia must make the most of the global need to have robust supply chain connectivity.

“We’re seeing a lot of end users now diversifying their supply chain.

“Our focus is to provide a very vibrant, strong supply chain connectivity, and make sure that we ride on that,” he said.

According to the Malaysian Investment Development Authority’s report on February 18, Malaysia holds 13 per cent of the global market for chip packaging, assembly and testing services.

Malaysia is also increasing its efforts to attract new businesses and to make itself a strong player in the field.

“At the end of the day,” the minister added, it’s “about economies of scale.”

News agency Bernama reported last week that Malaysia’s vibrant semiconductor industry has been the talk of the town of late as the country emerges as a new semiconductor powerhouse with the global spotlight on Penang.

The World Economic Forum stated on its LinkedIn page that Penang has major industry players from Europe and the United States setting up units or expanding existing operations as they seek to build new global supply chains for these vital components.

Besides the WEF, major media also reported that Penang has in recent years won new chip sector investments from multinationals, including Lam Research, Infineon Technologies, Texas Instruments, Micron Technology, Bosch, Advanced Semiconductor Engineering and Intel.

According to the international media, the investments have reinforced Malaysia’s entrenched position in the late stages of the semiconductor supply chain, particularly chip assembly, testing and packaging, areas in which it holds a 13 per cent share of the global market.

Source: Malay Mail

As Malaysia stakes claim in semiconductor industry, Putrajaya says not worried over competition with US, China

FE Green Pet (M) Sdn Bhd’s new high-tech recycling factory is expected to make Melaka a green investment destination and complement the economic growth strategy in the state, said Melaka Chief Minister Datuk Seri Ab Rauf Yusoh.

He said with an investment totalling approximately RM958 million, the plant on 14 hectares of land is projected to be completed by 2Q 2025, creating almost 500 jobs.

“This project is important because it will not only help pilot the state’s economic growth but also align our national objective of achieving a 45% reduction in carbon emission by 2030.

“At present Malaysia’s collect for recycling rate for polyethylene terephthalate stands between 28% and 45%, below global standards,” he told the press after officiating the groundbreaking ceremony of the factory at HICOM Pegoh Industrial Park here, on Thursday.

FE Green Pet is a subsidiary of Taiwan’s Far Eastern Group, a global leader in the polyester sector.

The plant will contribute to waste reduction, transforming waste into value-added products for numerous industries, namely beverages, apparel and accessories, for some of its globally known clients such as Coca-Cola, Pepsi, F&N, Nike, Adidas, and Lululemon.

Ab Rauf also said as the demand for green products is expected to rise, the state government will not only acknowledge both the challenges and opportunities that lie ahead but also encourage green investment in Melaka, especially investors interested in harnessing green energies from various sources.

“To maintain growth and welcome green investors to Melaka, we have, through the Malaysian Investment Development Authority (MIDA) and Invest Melaka, put serious efforts in making the process simpler and shorter and also provide a conducive environment for industries,” he said.

Meanwhile, FE Green Pet’s chairman Donald Fan said the establishment of the factory not only complements the company’s development strategy but also represents a firm commitment to environmental protection.

“Equipped with advanced technology, this factory will transform the discarded plastic bottles into high-value products, promoting resource circularity and contributing to the local economy,” he said.

Source: Bernama

RM958 mil high-tech recycling factory puts Melaka on green investors map — Ab Rauf

Malaysia, and to an extent Selangor, is positioned to be one of the primary beneficiaries of the ongoing trade tension between China and the United States (US), particularly in the multibillion ringgit semiconductor industry. 

However, to maximise these gains, the Federal government must focus on leveraging Malaysia’s position to move up the semiconductor value chain, according to an economist.

Prof Emeritus Barjoyai Bardai said the country should move away from conventional semiconductor manufacturing and instead focus on sectors like integrated circuit (IC) design. 

He said while current investment towards the semiconductor industry in the country is substantial, it is still at the lower end of the value chain.

“Malaysia is in a prime position to place itself as an IC design base for companies that are based in China, for example,” he told Selangor Journal. 

“Due to the ongoing tension between the US and China, Chinese companies cannot import IC design from the US and are now looking towards other options.” 

Barjoyai said although Malaysia ought to strive to attract these firms to invest and establish their bases here, the country should focus on being the centre for simple IC design and help establish a much more robust downstream semiconductor ecosystem. 

This, he said, will add value to the economy overall.

The semiconductor value chain consists of three main parts, namely upstream (IC design), midstream (IC manufacturing) and downstream (IC packaging and testing). 

Under the New Industrial Master Plan (NIMP) 2030, Malaysia hopes to raise the manufacturing sector’s value-added by broadening the scope of products being exported. 

The Federal government also hopes NIMP can encourage more front-end activities such as semiconductor equipment manufacturing, wafer fabrication and IC design.

Recently, Malaysia has seen major investments by Intel (RM29.12 billion) and Texas Instruments (RM12.9 billion), among others, to engage in more complex manufacturing activities. 

Intel’s expansion will include the construction of an advanced 3D chip packaging facility, its first overseas facility for 3D chip packaging.

Creating, retaining skilled workforce

Barjoyai applauded the approach taken by the Federal government to leverage the ongoing chip war between the US and China and engage with major semiconductor players to invest in the country.

He pointed out that Malaysia already has a mature and trusted track record in the semiconductor business, having begun making major investments into the sector since the 1960s.

However, the major challenge now is creating and retaining enough skilled and semi-skilled workforce to meet industry needs.

“Malaysia has a shortage of skilled workers in terms of engineers to fill critical positions. The same goes to the semi-skilled workforce that is required to fill in these gaps.

“That is why technical and vocational education and training (TVET) programmes are crucial to meet demands. 

“Having said that, more needs to be done by the government to expose the younger generation to artificial intelligence and the credible opportunities presented by the internet of things,” he said, adding that such a move would spur greater interest among the youth to pursue a career in these fields.

On the same note, Barjoyai said state governments such as in Selangor and Sarawak, which are competing to be the IC design base for many major semiconductor companies, should consistently conduct their own trade missions and engage with major industry players.

“They must do this continuously and continue to advocate the advantages (of investing in their states) to these companies.

“More importantly, state governments can also strike strategic partnerships with learning institutions in their respective states to produce a skilled workforce that meets the demands of the industry,” he said.

Recently, Selangor embarked on a trade mission to China and Hong Kong in an attempt to draw investors from the semiconductor industry there into the state. 

State executive councillor for investment and trade Ng Sze Han had said that the move is part of efforts to create a comprehensive semiconductor ecosystem in Selangor. 

He also announced the state’s plan to establish an IC design hub in Selangor, in a concerted effort to expand Malaysia’s semiconductor industry.

Similarly, the state government has pledged to improve the TVET ecosystem to prepare more workers for high-paying jobs.

Menteri Besar Datuk Seri Amirudin Shari had, in March, said there is a great need for skilled workers in sectors like electrical and electronics, biotechnology, aerospace and rail manufacturing. 

Among other things, he said the state administration plans to upgrade Universiti Selangor into a technical and vocational university and align Selangor Technical Skills Development Centre programmes with industry demands.

Source: Selangor Journal

Malaysia, Selangor must advance up semiconductor value chain — Economist

The Ministry of Investment, Trade and Industry (MITI) is calling for a review of the roles played by the Malaysia Steel Association (MSA) and Malaysian Iron and Steel Industry Federation (MISIF) for a potential merger of the two bodies to strengthen the steel industry as a whole.

MISIF is the association for flat steel players, and MSA is the body for long steel players.

MITI views the iron and steel industry as a strategic sector and continues to be committed to improving the industry in accordance with the New Industrial Master Plan (NIMP 2030), said its deputy minister, Liew Chin Tong.

“MITI looks forward to working with industry players to create a more sustainable, dynamic, and internationally competitive iron and steel sector,” he said in his speech at the recent Malaysia Steel Council (MSC) meeting.

According to Liew, the capacity of steel production in Southeast Asia is expected to increase from 75.3 million tonne in 2021 to 151.9 million tonne in 2026 if all potential investments materialise.

He said that Malaysia has raised the issue of overcapacity in the steel industry in Southeast Asia at the ASEAN Economic Ministers’ Retreat in March 2024, and the ASEAN Secretariat has agreed to elevate this agenda for ASEAN-wide discussion.

A number of important issues concerning the iron and steel sector were discussed, including enforcing government procurement (GP) in construction projects, where local content is mandated at the main contractors’ stage to permeate through the supply chain with the objective of safeguarding the ringgit, enhancing the local supply chain, and ensuring compliance with the local content requirement (LCR).

The other areas include strengthening enforcement by relevant authorities to ensure compliance with export declarations for steel scrap, which are subject to a 15 per cent export tax, Liew said.

“This measure aims to prioritise the use of scrap for local steel mill consumption, thereby bolstering domestic production and reducing reliance on imports, which will contribute to the sustainability and growth of the local steel industry,” he said.

Another key area of focus involves preventing the evasion of imported flat steel and ensuring fair trade practices within the industry.

Liew, who is the chairman of MSC, stressed the significance of implementing comprehensive measures to identify and tackle any attempts to circumvent trade regulations or tariffs.

This includes closely monitoring import activities, conducting thorough inspections of documentation, and working closely with relevant authorities to investigate suspicious transactions, he pointed out.

Moving forward, Liew underscored the collaboration between MITI, the Malaysia Steel Institute, and MSC members to adopt a carbon emission reporting method.

This initiative is set to roll out across the industry in the latter half of 2024, representing the initial stride towards carbon pricing, trading, and taxation.

Meanwhile, Liew observed notable progressions since the preceding Council gathering on July 13, 2023.

These include the establishment of the Independent/Special Committee (ICS) for the Iron and Steel Industry in Malaysia and the imposition of a moratorium on new steel investments.

Additionally, significant strides have been made in addressing steel overcapacity within ASEAN, implementing measures to ensure equitable competition in the steel sector, and instituting a framework for carbon reporting through the Independent/Special Committee for the Iron and Steel Industry in Malaysia.

Source: NST

MITI moots merger of steel industry bodies to strengthen industry

Cochlear Malaysia is undertaking an expansion exercise of up to RM10 million and is committed to continue grow and broaden its operations in the country.

“The current expansion we are going through is in the range of about RM10 million, excluding all the tools and equipment,” manufacturing and logistics vice-president Samuel Pooranakaran said at a press conference today after a site tour of Cochlear Malaysia’s manufacturing, servicing and corporate facility.

In terms of total investment to date, the company has invested close to RM50 million since 2016 for manufacturing-related activities.

Samuel said the company is mindful that it would need to expand its operations space from the current premises within the next few years. “There is growth but it will be driven by the market, but definitely we are committed and we are going to be here for a long time,” he remarked.

Meanwhile, Cochlear (Asian growth markets) general manager Amy Zheng said Cochlear’s investment into its local manufacturing facilities will have a spillover or positive impact on its overall business in Malaysia.

She pointed out that its first implant surgery involving its Cochlear product in Southeast Asia was performed in Malaysia.

“We have really worked hand in hand with the (local) healthcare professionals … we definitely want to work with the government and look into ways so that we can have more patients access it,” she said.

As part of its Australia-Southeast Asia Business Exchange programme, Australia’s assistant minister for trade and assistant minister for manufacturing Senator Tim Ayres led a delegation comprising 23 leading Australian businesses in the maritime, decarbonisation and renewable energy sectors to Malaysia and Singapore.

“There is a very strong record of two way investment and trade between Malaysia and Australia.

“Trade sits at about A$30 billion (RM92.5 billion) a year and our two-way investment is very strong, (with) Malaysian firms investing in Australian industrial capability and Australian firms like Cochlear announcing new expenditure and new expansions here but there’s enormous room for growth,” he said.

Source: The Sun

Cochlear Malaysia spending up to RM10m to expand operations

Robust capacity expansion plans and medical equipment tenders are set to drive UMediC Group Bhd’s (UMC) earnings growth in the near term.

Hong Leong Investment Bank Research (HLIB Research) said the medical device maker has relocated its warehouse to a newly built plant, making room for manufacturing-capacity expansion at its existing site, following the completion of the group’s new facility.

The new facility is awaiting regulatory approvals.

“Production capacity is expected to reach 420,000 bottles per month by April 2024 (from 300,000 units per month currently), which is then expected to increase to 600,000 bottles per month by December 2024,” the research house said in a report yesterday.

HLIB Research said the necessary equipment to produce up to 600,000 bottles has been successfully installed at UMC’s production facility.

Currently, UMC is conducting thorough test runs to ensure adherence to quality standards, before a gradual ramping up of production.

“Considering the robust demand for its HydroX prefilled humidifier, we acknowledge the potential for further capacity expansion beyond the completion of the ongoing expansion,” the research firm said.

Apart from that, UMC’s medical equipment tenders for new hospitals and expansion projects continued to remain strong, alongside the emergence of tenders for routine medical equipment replacement.

HLIB Research noted that some of the tenders are taking on a leasing model as opposed to upfront lump-sum payments upon equipment delivery.

A leasing model entails staggered payment for equipment, either with a monthly or quarterly payment.

“This signals the government’s initial venture into the leasing model and if successful, we anticipate a potential increase in similar tenders in the future.

“This transition could prove advantageous for UMC, as it would necessitate the participation of suppliers with solid financial standing due to the lengthened payment period, potentially side-lining smaller competitors,” the research house said.

UMC has also recently diversified into healthcare services with the establishment of the UMC Care Centre.

This is a brand new venture, complementing its core business of medical-equipment distribution.

“The care centre will occupy a four-storey shoplot spanning 7,427 sq ft in Batu Kawan, Penang. It will offer a range of services including aged care, short-term care for post-surgery patients and long-term care for individuals with illnesses,” HLIB Research said.

The research house added that approval for the facility’s floor plan has been obtained from local authorities and renovation work is currently in progress, with completion expected by the end of May. Operations are slated to commence in July 2024.

UMC also recently secured approval to transfer to the Main Market of Bursa Malaysia. The exercise is expected to be completed by the first half of 2024.

“While this transition does not entail any fundamental changes within the company, we regard it as a positive development as it would make UMC more investable, improving participation from institutional investors,” the research house said.

HLIB Research maintained a “buy” call on UMC with a target price of 91 sen. It also advocates investors eyeing long-term growth to accumulate the company’s shares on price weakness.

Source: The Star

Capacity expansion, diversification to boost UMediC

The semiconductor strategic plan should encompass the industry’s ecosystem for Malaysia to achieve its goal of becoming a preferred investment destination for the industry, said an expert.

Putra Business School analyst Associate Professor Dr Ahmed Razman Abd Latiff said it was important for the plan to have investor-friendly policies and enough skilled workers for the industry rather than just being a masterplan.

“It is essential to ensure that the strategic plan encompasses the ecosystem of the industry and that it also covers the supply chain.

“We want to make sure that we will not only have the right infrastructure and facilities, but must also have investor- friendly policies and enough skilled workers for investing companies.”

Malaysia must facilitate knowledge transfer to promote innovation, thereby creating added value for companies and the industry, he said.

Yesterday, the National Investment Council instructed the Investment, Trade and Industry Ministry to develop a semiconductor strategic plan to sustain Malaysia’s status as a preferred investment destination.

Prime Minister Datuk Seri Anwar Ibrahim said this was crucial to attract semiconductor companies to establish high-quality semiconductor manufacturing facilities.

Centre for Market Education chief executive officer Carmelo Ferlito said while an attempt to preserve Malaysia’s competitiveness was welcomed, in particular in a crucial sector like semiconductors, the effectiveness of the masterplan was questioned.

Instead, he said, the government should focus on designing a broad, comprehensive pro-competitiveness bill to establish the nation as a regional investment hub.

“I tend to be sceptical about the usefulness of masterplans, blueprints and strategic plans, which often turn out to be not much more than well-crafted wish lists.

“Instead, the government should move more in the strategic direction of designing a broad and comprehensive pro-competitiveness bill, similar to what Indonesia did with its Omnibus Law.

“In fact, Malaysia should aim to restore its place as a preferred regional investment destination not only for semiconductors, but in general.

“What I have in mind is what was designed in the past with schemes like the principal hub designed by the Malaysian Investment Development Authority and which needs to be upgraded in light of the regulations that came afterwards.”

A principal hub is a locally incorporated company that uses Malaysia as a base for conducting its regional or global businesses and operations to manage, control and support its key functions, including management of risks, decision making, strategic business activities, finance, management and human resources.

Ferlito highlighted Malaysia’s potential as a regional hub, emphasising the need for a holistic approach that included simplifying business registration, fair taxation, access to labour and a robust banking system.

Source: NST

Semiconductor strategic plan should include investor-friendly policies, says expert

CAPITAL A Bhd, the parent company of budget airline AirAsia, is considering a spin-off and separate listing of its engineering arm Asia Digital Engineering Sdn Bhd (ADE), say sources. An initial public offering (IPO) of ADE has been part of the group’s plan all along, they observe, adding that deliberations are still ongoing.

“The group is either going to list ADE separately or together with its other aviation services, including in-flight service provider Santan and shared services business DARTS,” says a source.

While it is not immediately known how much Capital A plans to raise from the listing of its aviation services, another source points out that ADE could be spun off on its own.

For the financial year ended Dec 31, 2023 (FY2023), Capital A’s aviation services posted RM887 million in revenue and RM162 million in earnings before interest, taxes, depreciation and amortisation (Ebitda). ADE — Capital A’s wholly-owned subsidiary involved in aircraft maintenance, repair and overhaul (MRO) — doubled its revenue to RM576 million while its Ebitda jumped 137% year on year to RM146 million.

When contacted by The Edge, Capital A says: “Listing the entities under Capital A, including ADE, has been part of the management’s long-term strategy. We will announce once we have significant developments on our end.”

ADE CEO Mahesh Kumar recently said there was a potential IPO in the pipeline.

“We aspire to get ADE listed. You know, but you never say no. In terms of listing plan, Capital A has various businesses under its portfolio that have listing potential,” Bernama quoted him as saying in a report last month.

In an interview with The Edge recently, Capital A CEO Tan Sri Tony Fernandes said that after selling its airline business to AirAsia X Bhd, Capital A will be left with four companies — Teleport, Capital A Aviation Services, MOVE and Capital A International.

On Jan 8, Capital A entered into a non-binding letter of offer with AAX for the proposed disposal of AirAsia and AirAsia Aviation Group Ltd (AAAGL) for a disposal consideration to be agreed upon by the parties at a later date. AAAGL operates passenger airline services, providing air transport through its subsidiaries in Indonesia, Thailand, Cambodia and the Philippines.

Once the proposal to sell Capital A’s aviation business to AAX is approved by Bursa Malaysia, the balance sheet of the aviation business can be leveraged to raise the capital needed for the aviation group to take off.

At the same time, the sale of the aviation business will further strengthen Capital A’s balance sheet and is another step towards lifting the company out of Practice Note 17 status, said Fernandes. However, the definitive agreement is currently in the works, which means the valuation of the aviation business is yet to be made available.

Fernandes also said the aviation services segment could potentially take over the listing status of Capital A following the exercise.

It is worth noting that in April last year, ADE secured a US$100 million (RM473 million) investment from OCP Asia Ltd, which is earmarked for the construction and operationalisation of a state-of-the-art 14-line aircraft maintenance hangar facility in Sepang. This is in addition to its existing facilities at klia2. ADE has projected that the group could be one of the largest aircraft MRO service providers in the region once the new facility is completed as it also has operations at Subang Airport in Selangor and Senai Airport in Johor.

Once completed, the new facility is expected to speed up the listing of ADE. The facility spanning more than 8.19 acres is being constructed in two phases, with the first phase expected to be completed as early as next month and the second phase sometime in October.

The US$100 million investment will also be used for ADE’s further business expansion in other verticals and geographical markets.

ADE was founded in 2020, using AirAsia’s engineering division as its foundation. The subsidiary is handling 45% of AirAsia’s heavy maintenance. The intention is to eventually take over all of the group’s base maintenance requirements as well as pursue third-party work.

Source: The Edge Malaysia

MRO arm listing part of Capital A’s long-term strategy

The Ministry of Investment, Trade and Industry (Miti) will draw up a comprehensive semiconductor strategic plan to ensure that Malaysia continues to be the chosen investment destination for this strategic industry, said Prime Minister Datuk Seri Anwar Ibrahim.

Anwar, who is also the finance minister, said the matter was decided in the third National Investment Council meeting this year, which he chaired earlier on Tuesday.

Anwar said the strategic plan will include a more attractive incentive package to enhance the inclusion of strategic investments in high-tech semiconductors, particularly to encourage more front-end activities in the semiconductor industry in Malaysia.

“Rightly, this is important to attract the interest of various international semiconductor companies to establish high-quality semiconductor manufacturing facilities in Malaysia,” said Anwar through a post on his official Facebook page on Tuesday.

Anwar said the meeting, among other things, also examined the country’s current position and future prospects for the semiconductor industry, including support for various expansion proposals that had been submitted to the prime minister.

“The meeting also discussed a proposal for the development of the Kerian Integrated Green Industrial Park (KIGIP), and agreed that it should be implemented as a joint venture by the government-linked investment company, in collaboration with the federal government and the Perak government.

“This is a starting point for the Madani government’s efforts to accelerate the development of the KIGIP, which is seen as one of the main catalysts to attract green investments into the country.

“Furthermore, the operation of the KIGIP will be entirely generated with renewable energy, in line with the country’s aspirations towards achieving carbon neutrality as early as 2050,” added Anwar.

Meanwhile, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz through a separate post on his Facebook page said the strategic plan to be launched will be in line with initiatives under the New Industrial Master Plan 2030 (NIMP 2030).

“The NIMP 2030 set investments in wafer fabrication activities as one of the projects to further strengthen Malaysia’s position as a major player in the semiconductor sector in the region,” he said.

Tengku Zafrul said the strategic plan to be drawn up is important to attract the interest of various international semiconductor companies to transfer or establish their respective high-quality semiconductor manufacturing facilities to Malaysia.

Source: Bernama

Anwar: MITI to draw up comprehensive semiconductor strategic plan

The plans to establish an integrated circuit (IC) design hub in Selangor are in place as part of the state administration’s efforts to expand Malaysia’s semiconductor industry, said Ng Sze Han.

Following a recent trade visit to several of China’s tech-savvy cities and Hong Kong, the state executive councillor for investment, trade, and mobility said the move is a step forward in creating a comprehensive semiconductor ecosystem, and hinted that more announcements on the industry expansion are expected soon.

“Selangor will be stepping forward to build a more complete semiconductor ecosystem in the country by setting up an IC design hub, which houses a few hundred IC design engineers.

“Stay tuned for more exciting announcements soon,” he said in a Facebook post yesterday.

During the six-day trade visit, Ng said Selangor engaged with semiconductor industry players in the cities of Suzhou and Shenzen, as well as in Hong Kong, where they were encouraged to invest in the state.

“In a short six-day visit, we traveled from Suzhou to Shenzhen and lastly to Hong Kong. We attended 21 meetings, as well as engaged with 16 semiconductor companies and ten agencies,” he said.

Previously, during the State Legislative Assembly sitting, Ng said the Selangor government will unveil its plan to develop the semiconductor industry in the state.

The strategy, which will be announced by Menteri Besar Dato’ Seri Amirudin Shari, will focus on semiconductor manufacturing and include its design aspects.

Similarly, Amirudin said the state government’s position will focus on the semiconductor industry this year in a bid to enhance its economy and better compete against countries in Southeast Asia.

Selangor is embarking on a strategic move to attract more businesses involved in the industry to invest in the state amid the ongoing trade tensions between China and the United States.

He added that the state government is currently engaging in discussions with industry players from both China and Taiwan to realise this goal.

Source: Selangor Journal

Exco: Selangor to set up chip design hub for semiconductor industry expansion

EP Manufacturing Bhd (EPMB) said it has teamed up with China-based BAIC Motor Corporation Ltd to assemble and manufacture BAIC’s authorised model vehicles in Malaysia.

The auto parts maker said its wholly-owned unit PEPS-JV (Melaka) Sdn Bhd (PJVM) had a week ago signed an agreement with BAIC, which is part of Beijing Automotive Group Co Ltd, a Fortune Global 500 company and one of China’s largest carmakers.

Under the 10-year agreement, PJVM’s responsibilities include assembling and manufacturing the vehicles in Malaysia, ensuring that the assembly plant has a capacity of at least 5,000 vehicles per year by Sept 1, and at least 10,000 vehicles per year by March 1 next year, said EPMB in a bourse filing on Monday.

PJVM must also procure all necessary devices, equipment, permits, or approvals for vehicle assembly and manufacturing and bear relevant expenses.

BAIC’s obligations, meanwhile, involve authorising PJVM to assemble and manufacture the vehicles, providing technical support and training for assembly and manufacturing, and overseeing the assembly process.

EPMB said the agreement replaces a memorandum of understanding between the group and BAIC entered into in August last year, for the development of BAIC’s BJ40P and X55II sport utility vehicles and right-hand drive electric vehicles for Malaysia and other Southeast Asian right-hand drive markets.

EPMB noted that the latest agreement allows vertical integration of the group’s operations to tap into the expanding automotive market, expanding its income stream, and enhancing the group’s financial stability and long-term prospects.

“The strategic collaborations with original equipment manufacturers from China signify our commitment to charting a course towards better profitability for our stakeholders,” added EPMB executive chairman Hamidon Abdullah in a statement.

Notably, EPMB announced an investment of over RM100 million in October last year to construct an automotive manufacturing plant in Melaka for BAIC and Great Wall Motor vehicles at the Hicom Pegoh Industrial Park in Alor Gajah.

The facility, developed in multiple phases, is expected to create about 1,000 new jobs once fully operational, and will initially produce up to 30,000 vehicles annually.

Shares in EPMB closed 1.5 sen or 2.21% lower at 66.5 sen on Monday, giving the group a market capitalisation of RM146.49 million.

Source: The Edge Malaysia

EP Manufacturing inks deal with China’s BAIC for vehicle assembly in Malaysia

The government is reaching out to the Malaysia Semiconductor Industry Association (MSIA) to improve the investment climate and ease of doing business to attract global semiconductor companies to relocate to Malaysia.

MSIA president Datuk Seri Wong Siew Hai said there should be regulatory changes to improve the investment climate accompanied by operational efficiency.

He also said that equally important is reducing bureaucracy, having the right infrastructure in place, the necessary utilities, as well as an industrial ecosystem which should include industrial clusters to support the relocating companies.

“This will position Malaysia as a preferred investment destination for renowned companies wanting to expand abroad and grow their business due to geopolitical tensions brought on by the US-China chip war,” Wong, who is a veteran with 27 years of working experience in the semiconductor industry, told Bernama in an interview today.

He noted that of utmost importance is Malaysia not to lose sight of the fact that the semiconductor industry is the “golden goose” of the nation.

“We need to nurture it carefully, grow and make the industry to be globally significant,” Wong said, adding that agencies involved in attracting and approving investments including state governments need to reduce bureaucracy and achieve greater ease of doing business.

Malaysia needs to prepare for foreign investments by building the necessary infrastructure and not rest on its laurels amid regional competition, he said.

These include power, water, airports, as well as facilitating shipments which would lead to increased exports for the company and the country.

Wong explained that it is important to develop an industrial ecosystem, including clusters, wafer fabrication (fab) plants and assembly test facilities, to build these fabs to increase chip manufacturing capacities so that multinationals find relocating to Malaysia more attractive.

Competition is stiff as these companies are being pursued by countries like Vietnam, Thailand, the Philippines and India, all of which are “trying to also chip in and play the game”.

These measures to improve the investment climate are pertinent, more so since the Madani government is aiming for Malaysia to be ranked 12th in global competitiveness within a decade from its 27th position currently.

To facilitate the necessary improvements to investment, Wong, who has had a long stint with Intel Penang, said MSIA has gathered feedback from the electrical & electronics (E&E) industry and passed it on to the government.

“The good news is that the government is engaging with MSIA,” he said, adding that MSIA’s feedback has led to online applications for work permits for expatriates in the industry being shortened to just 10 days now from 6-12 months in 2022-2023, and a mere five days for those in the green lane or fast-track basis.

“There are other areas which may be more difficult to resolve, but at least with the political will and the willingness to work together, we can continue to make progress.

“If our rate of improvement is faster than them (other countries), then we will be a favoured country for investment,” Wong said.

One of the major factors that led foreign semiconductor companies to relocate to other destinations besides their home base was business grinding to a halt during Covid-19.

Recalling the pandemic, he said many could not ship their products such as Taiwan, the United States and Germany, among others, and not just Malaysia.

“But Malaysia was highlighted as a country that stopped all the production of cars worldwide. This was because we have a few semiconductor companies which produced automotive chips or integrated circuits for cars.

“To mitigate such risks, a lot of companies – especially American and Chinese companies – felt they could not be in just one country but decided to relocate to other destinations and avoid US tariffs as well.

“That was how all this (scramble to look for other investment destinations) started and Malaysia turned out to be the perfect destination and beneficiary,” said Wong.

Source: Bernama

Govt engaging with MSIA to improve investment climate for semiconductor industry

GLOBETRONICS Technology Bhd, an established outsourced semiconductor assembly and test (OSAT) player, is planning to move up the value chain by diversifying into advanced packaging to ride the wave of rising demand for such services.

It also expects advanced packaging to be its future revenue growth driver and aims to attain leadership within the segment in this region over the next five years.

CEO Heng Charng Yee says the new business segment will enable Globetronics to package semiconductor chips supportive of artificial intelligence (AI) technology.

“The critical part of advanced packaging is the ability to co-develop with customers starting from package design and simulation. That will be the group’s strength,” she adds.

The group’s strategy is to rope in a partner from Taiwan to shorten the learning curve for Globetronics and build up confidence among potential customers that are interested in the service.

The company is in talks with a leading Taiwanese OSAT player established in advanced packaging to bring its technological know-how to Malaysia.

“We are in discussions now about the investment plan. The timeline to set up the facility can be as short as nine months to up to two years [after the deal concludes],” Heng tells The Edge during a media plant visit in Penang.

Globetronics says it will fund the advanced packaging facility via internal funds and bank borrowings, but final details about the investment will be announced later. Its cash and bank balances stood at RM210.11 million as at end-December 2023, with no borrowings.

Advanced packaging is a subset of traditional packaging that boosts computational capabilities while lowering power consumption and costs. It also offers higher profit margins than traditional packaging. Demand for AI, 5G technology and the Internet of Things (IoT) drives growth for advanced packaging, prompting more companies to invest in such technology.

The global advanced packaging market was worth US$29.2 billion in 2022 and is expected to reach US$66.9 billion by 2032, growing at a compound annual growth rate (CAGR) of 8.7% during the forecast period, according to DataHorizzon Research, a market research and consulting firm.

In Taiwan, OSAT vendors Advanced Semiconductor Engineering Inc (also known as ASE Group), Powertech Technology Inc and the world’s largest contract chip manufacturer Taiwan Semiconductor Manufacturing Co Ltd (TSMC) are key players in the advanced packaging market.

Globally, OSAT players such as US-based Amkor Technology Inc and China-based JCET Group Co Ltd, chipmaker Intel Corp and consumer electronics giant Samsung Electronics Co Ltd are in the advanced packaging business.

Note that Inari Amertron Bhd and UWC Bhd are among local listed players that have ventured into advanced packaging testing. 

US-China tensions open door for Globetronics’ advanced packaging venture

Heng says Globetronics benefits from US-China geopolitical tensions, which have put Malaysia in a sweet spot with businesses seeking to build resilience in global supply chains, Heng says.

“This geopolitical situation is a good thing for Malaysia … Another advantage for us is a strong push from customers that don’t want China’s participation, [because] people would ask whether we are a Malaysian company and they like a neutral position. So, that is our advantage,” she explains.

“This is the segment to grow, but it isn’t easy, as [advanced packaging] is dominated by [established] industry players. With the advanced packaging mostly from Taiwan and some from China, this region has a very good opportunity. So, we want to position and enter this market quickly to become a market leader.”

Heng points out that there are numerous requests, including from international bodies such as the Semiconductor Industry Association, for Malaysian companies to invest in the advanced packaging segment.

Apart from competition from overseas players, high investment costs are a major concern for Malaysian companies when investing in the advanced packaging segment.

“There is a lot of reluctance … because of the substantial investment, and the know-how also is challenging. But if you look at it, this [advanced packaging] is highly dominated by Taiwanese players. The fear of doing this is real,” Heng says, adding that Taiwan dominates in advanced packaging with more than 50% market share.

“But, if we do not do this in Malaysia, we could lose out on this segment eventually. If you look at the smartphone, almost every component is very advanced. Then, if you look at future automotive, they will also move into this segment as well. In fact, our sensor business is also looking at the new generation requirement already. So, we see this happening and if we don’t take this step, we will be left behind.”

Heng has been with the group since 2013, starting out as a quality and strategic business manager at subsidiary Globetronics Manufacturing Sdn Bhd. She was appointed CEO in July 2022, succeeding her father Datuk Heng Huck Lee, who retired after serving as CEO since January 2008.

She is also the group’s non-independent executive director. Prior to her appointment as group CEO, she served as the group’s chief operating officer since January 2021.

Early this year, Heng exercised her employee stock options and acquired 829,700 shares before selling one million shares in Globetronics on Feb 7, leaving her with just 32 shares in the company.

According to Globetronics’ 2022 annual report, she had 170,332 shares or direct interest of 0.03% in the company as at March 24, 2023.

Near-term outlook seen as challenging for Globetronics

UOB KayHian Research says the game changer for Globetronics could come from any new business collaboration or advanced packaging manufacturing solution.

“Globetronics is rationalising its low-margin business and pursuing new programmes with its existing and new customers. While the company is not fully out of the woods yet, the game changer could be the fruition of its active engagement with potential Chinese and Taiwanese customers,” the research house wrote in a Feb 21 report.

UOB KayHian, which has a “hold” call on Globetronics with a target price of RM1.49, also noted that the company benefits from 5G and IoT, with its growing relevance in high-end smartphones. In the long term, it remains hopeful of the group’s ability to improve its relevance in high-tech sensor products for various applications, which would continue to spearhead earnings growth.

According to Bloomberg data, there are five “hold” calls and four “sell” recommendations on Globetronics.

The counter closed at RM1.40 last Tuesday (April 9), exceeding analysts’ 12-month median target price of RM1.24.

Maybank Investment Bank Bhd, which rated Globetronics a “sell” with a target price of RM1.05, believes its shares are overvalued and its outlook remains challenging in the near term, owing to margin pressures from a high fixed-cost base.

The fewer working days because of festivities in the first quarter this year are expected to pose a continuous drag on its financial performance, Maybank IB adds.

Given the inflation pressures and stiff competition in the premium segment of the wearables markets that would weigh on demand for the company’s products, Maybank IB has cut its earnings forecast for Globetronics by 7% for the financial year ending Dec 31, 2024 (FY2024), and 12% for FY2025. It now sees Globetronics delivering an annual net profit of RM34 million in FY2024 and RM41 million in FY2025.

Globetronics’ revenue and earnings have been volatile, and on a declining trend since FY2018.

For FY2023, Globetronics generated a revenue of RM131.82 million with a net profit of RM26.42 million.

Its earnings have dwindled from RM70.12 million in FY2018 to RM45.46 million in FY2022 while revenue dropped from RM327.96 million to RM180.05 million during the same period.

Boardroom reshuffle amid APB Resources stake acquisition

Penang-based Globetronics was co-founded by former executive chairman Michael Ng Kweng Chong and C K Tan in 1991, providing integrated circuit (IC) burn-in services. It was listed on the local bourse in 1997.

Lately, the company has seen changes in its board and major shareholders, following the Ng family’s exit and emergence of APB Resources Bhd as Globetronics’ second-largest shareholder, with a 10.41% stake.

The Employees Provident Fund is the largest shareholder in Globetronics, with a 13.06% stake; Lembaga Tabung Haji has 5.36% in the company.

APB Resources is involved in the fabrication of specialised design process equipment for the petrochemical, oleochemical, oil and gas, power as well as food and beverage industries.

In a filing last December, it was disclosed that APB Resources acquired a 10.41% stake in Globetronics for RM140 million, or RM2 per share, from General Produce Agency Sdn Bhd (6.89%, or 46.31 million shares) and Ng Kweng Chong Holdings Sdn Bhd (3.52%, or 23.69 million shares), vehicles of the Ng family, who co-founded Globetronics.

Following the completion of the deal in February, Globetronics named three new members to its board — Liaw Way Gian, Kang Wei Luen and Ku Chong Hong. Liaw was made group executive chairman, while Kang and Ku were appointed executive directors.

All three appointees also hold directorships in APB Resources, Artroniq Bhd and Sarawak Consolidated Industries Bhd. The counters of these companies faced heavy selling pressure in January this year.

Subsequently, the Globetronics board saw the departure of executive chairman Ng Kok Yu, non-independent and non-executive director Ng Kok Khuan, and independent and non-executive directors Datin Suryani Ahmad Sarji, Khoo Kay Leong, Ong Huey Min and Mohammad Hazani Hassan, effective Feb 21.

Kok Yu and Kok Khuan are Michael’s son and nephew respectively.

As to the boardroom changes in Globetronics, RHB Research Investment Bank Bhd stated in a Feb 22 report that the onboarding of a new major shareholder might spell a more growth-focused phase ahead, although the overall business direction remains unchanged in the near term. Still, the research house noted that the potential risk of changes in the management team and strategies, with the onboarding of new major shareholders, could bring about a “structural change” to the counter.

RHB Research has kept its “neutral” call for Globetronics and maintained its target price of RM1.45.

At last Tuesday’s close of RM1.40, Globetronics’ share price has declined 12.5% year to date, valuing the group at RM945.06 million. 

Source: The Edge Malaysia

Globetronics to venture into advanced packaging on back of rising demand

KUKA’s robots to support high productivity and quality manufacturing

The fascination with robots is evolving. One of the largest worldwide suppliers of intelligent automation solutions is German robot maker KUKA, whose robotics technology is now supporting a diverse range of industries in the Malaysian automation market.

KUKA’s capabilities and cutting-edge technologies are known for various applications such as palletising, welding, machine tending, simple assembly, pick and place, as well as training cells.

Priding itself on having all the right robots in its portfolio, KUKA’s machines have allowed it to provide customers with robots for a range of applications, from small assemblies in the furniture industry to side panels for freight cars.

Its welding robots, for instance, are for customers in the central manufacturing sectors of the automotive and metalworking industries. Unlike a human workforce, the robots are automated to complete complex welding tasks efficiently and furthermore, to implement them to perfection down to the tiniest weld seam with high system stability.

These robots visibly stand out for their significantly increased productivity due to integrated process steps, reduced cycle times and long maintenance intervals.

KUKA Asia-Pacific excluding China (APeC) regional CEO and KUKA Malaysia CEO Alan Fam said with KUKA’s intelligent automation products, productivity has been proven to rise, which in turn will affect profitability in the entire value chain.

The smart integration of its products into the digital and connected world of production does not stop at just the company’s welding robots, with KUKA having other robust and flexible robots suitable for a wide range of tasks.

Diverse portfolio

As much as the robots look like they are involved in heavy labour like welding and palletising, KUKA has robots that are capable of handling tasks in the food and medical field.

Robots such as the KR Cybertech HO and KR Iontec HO have food compatible H1 lubricants in all axes, which allow the products to meet the high, stringent requirements of the food industry for hygienic handling.

Other robots, like the LBR Med, are capable of executing diagnostics and surgical interventions on patients. KUKA even has a range of robots developed for a variety of cleanroom applications.

Designed for environments that need the highest levels of cleanliness and the lowest levels of particle emission without sacrificing speed or performance, KUKA’s robots are reliable and fast enough to achieve high productivity and quality manufacturing for industries such as life sciences, healthcare, medical devices, biotechnology and pharmaceuticals.

These robots can be used even in confined workspaces, as they can be mounted on the floor, ceiling, wall and at an angle.

Industrial Internet of Things

With Industry 4.0 in full swing, established structures are on the way out, with cyber-physical production coming in at full force. Via its Malaysian business entity KUKA Robot Automation, the group seems well-prepared for the change, with intelligent machines equipped with sensitivity and enhanced intelligence designed to work side by side with humans, while still operating more independently than before.

The fleet of products by KUKA are mobile, highly flexible and versatile for changing industries that are incorporating digital networking and autonomous adjustment to rapidly changing production requirements.

“It is easier to teach a cobot programming as compared to an industrial robot. It is also easier to integrate a cobot to any of the external devices. Because of these benefits, cobots are very popular and are used in many industries, such as automotive, manufacturing, electronics, warehousing and logistics,” said KUKA Robotics (APeC) senior business development manager Deric Chin at the launch of KUKA Malaysia office in Puchong last week.

A portmanteau of “collaborative robots”, cobots are another arm of KUKA’s products that are designed to work with humans in a shared space. Among many others, this splicing of value in both humans and robots is something KUKA sees that will drive growing productivity.

Both the robots and cobots by KUKA have made an indelible mark on companies that are using the products in Malaysia. A steel wire and wire mesh manufacturing company in Perak that uses KUKA’s products, Wei Dat Steel Wire, has witnessed the uptick in production firsthand.

“We are amazed by the performance of KUKA’s KR Quantec-2 robotic arm. With this automation in place, the entire steel wire bending process is faster and efficient. Previously, (we could) see 500 steel wire mesh bent in one day. It has now increased to 1,500 per day,” said an employee from Wei Dat.

KUKA is ready to support more Malaysian businesses to raise efficiency and automate operations as the country’s smart technology continues to grow.

Source: The Sun

Built for Industry 4.0

Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said the recent report by the Asean+3 Macroeconomic Research Office (Amro) on Malaysia’s growth underscores its potential to become a high-income nation by 2030, driven by significant foreign direct investment (FDI) inflows.

He said plans are in place to enhance the country’s electrical and electronics (E&E) ecosystem, improve business conditions, and prepare for global minimum tax implementation in 2025.

He said Malaysia is dedicated to attracting high-technology companies and encouraging value chain advancement within existing industries.

“Efforts are also ongoing to boost the semiconductor ecosystem through the New Industrial Master Plan (NIMP) 2030, which includes attracting wafer fabs and advancing packaging, assembly, and testing capacities to reinforce Malaysia’s global industry position,” he said in a reply to a post on X here on Sunday.

Tengku Zafrul was replying to a post by a local financial media quoting Amro on the Malaysian economy and the year-end peak of the semiconductor upcycle.

According to Amro, Malaysia’s gross domestic product is expected to grow by 5% this year  2024, outpacing Asean’s average of 4.8%.

Amro also said that economic growth in the regional bloc is expected to improve, premised on higher exports, on the back of the semiconductor upcycle, continued strength in the US goods consumption, and robust demand for travel and services.  

Apart from that, Tengku Zafrul said that Semiconductor Equipment and Materials International (Semi) has reported a global semiconductor manufacturing industry recovery, with increasing electronics and integrated circuits sales. 

He said that Malaysia’s semiconductor sector  is also poised for significant growth in the latter half of 2024, bolstered by a World Semiconductor Trade Statistics prediction of a 13.1% market rebound.

“Malaysia achieved a historic high in approved investments of RM329.5 billion in 2023, a 23% increase from the previous year, with foreign investments constituting 57.2% of the total (approved investments),” said Tengku Zafrul.

Source: Bernama

Zafrul: Plans in place to enhance Malaysia’s E&E ecosystem, prepare for global minimum tax implementation

The Automotive High Tech Valley (AHTV), a mega project in Tanjong Malim, Perak involving an investment of RM32 billion, will give a positive impact in terms of price and development of property, not only in Batang Padang but Bidor as well.

Perak Menteri Besar Datuk Seri Saarani Mohamad said the project will transform Tanjung Malim into a global automotive hub for new energy vehicles (NEV) while expanding to include talent development, research and development, urbanisation as well as offer job opportunities to 370,000 throughout the construction and 160,000 once completed.

He said the state government through the Lembaga Perumahan Hartanah Perak (LPHP) will take the initiative to prepare new housing projects to cater for the high demand in the district.

Saarani said the AHTV mega project would certainly demand the availability of housing units to meet the demand for accommodation in the long run.

“A part of the important aspect will be that it would influence the development of social community in the surrounding areas through various projects being carried out in the Bidor area,” he told reporters after opening a housing project and Hari Raya Aidilfitri open house, here today.

Also present were State Housing and Local Government Committee chairman Sandrea Ng Shy Ching; Perak Human Resources, Health, Indian Community Affairs and National Integration Committee chairman A. Sivanesan and Demi Hartajaya Sdn Bhd managing director Vincenns Lim.

Source: Bernama

Automotive High Tech Valley project can give positive economic impact to Bidor, says Perak MB

THE electric vehicle (EV) industry has a lot of ground momentum driving its growth and adoption globally, but there are still key chokepoints that could impede any widespread adoption locally – at least for the moment.

No doubt, the EV sector is still touted as the biggest shift in the automotive industry that is still in progress since the development of the petrol internal combustion engine (ICE) which took off in the 20th Century.

Apart from the promise of vehicles powered by clean energy, EVs are by and large still bought by the top-20 income group in the country due to affordability issues, arising from the current taxation structure and limitations put in place to protect the local automotive supply chain.

It will likely continue to be this way at least until Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd or Perodua launch their own EVs and the government eventually opens this space up to more competition, which may then drive further growth in EV sales.

This may provide a hint of what may be to come for the EV industry locally and how this might challenge and eventually alter the outlook for ICE vehicles and its supply chain ecosystem in Malaysia.

At present, China is seen as the prime country mover of the global EV industry on its ability to change and challenge the industry’s status quo.

According to the International Energy Agency or IEA in its Global EV Outlook 2023, China dominates global sales of EVs and accounted for around 60% of global electric car sales last year.

More than half of the electric cars on roads worldwide are now in China, while Europe and the United States come in at second and third.

Of late, the industry in China has seen fierce price wars, with recent EV cars being priced from as low as US$9,700 for the new BYD Seagull.

It is likely that prices of such cars would continue to drop even further, especially if EV batteries become more efficient and cheaper in the future. Batteries presently make up about half of the selling price of an EV.

The recent decision by US-smartphone maker Apple Inc to abandon its plan to build EVs only highlights the risks it is avoiding to compete in a space which is seeing a strong price war globally.

China-based smartphone and appliance maker Xiaomi’s founder and chairman Lei Jun reportedly expressed he was “very shocked” at Apple’s decision, stressing Xiaomi remained firmly committed to building EV cars. He Xiaopeng, chairman of Guangdong-based carmaker Xpeng, expressed similar sentiment about Apple’s decision to abandon its car plans.

Xiaomi recently launched a sport utility vehicle (SUV) in China, code-named SU7, at a starting price of RM141,525. The SU7, reportedly looks and feels similar to a luxury SUV but at half the price, with EV technology and smart features installed; and it has already attracted a long waiting line of buyers in China, demonstrating how competitive this space will potentially get, moving forward

Industry analysts surveyed agree that the main driving factor for the global push towards EVs is the presumed threat of climate change and the ambition of achieving broader environmental, social and governance (ESG) goals of any particular country.

They also note the barriers to entry of the EV space have been lowered in recent years, especially for an existing smartphone maker, as battery EV cars (BEVs) are often likened to a smartphone on wheels.

Sales acceleration

China is a net oil importer faced with a longstanding issue of air pollution. This is likely a push factor for it to further grow its EV sector but it is notable that Norway, which is a net oil and gas exporter, stands out as an exception to the rule.

Due largely to a change in taxation regimes for ICE vehicles in Norway, the EV industry has grown strongly there in the last couple of years and EVs constituted 93.9% of the country’s passenger auto registrations in January 2024 with BEVs at 92.1% of the month’s sales figures.

Norway is the country with the highest share of EV sales in the world now, closely followed by other European countries such as Iceland at 50% in 2023 and Sweden at 51.8% in February 2024.

The World Resources Institute notes that a common pattern is seen in EV sales where in every country, once EV sales reached 1%, they accelerated.

“This acceleration happened faster in some places than others, but all are following an S-curve pattern,” it points out.

But a conducive tax or duty structure in place to encourage EVs also plays a determining role whether any take off or growth in EVs would eventually happen.

Case in point is the United Kingdom where demand for ICE vehicles has risen and EV demand has fallen after incentives for drivers buying new EVs were scrapped in 2022.

Data coming out from Europe, the frontier region for ESG-friendly policies, meanwhile, saw EV sales falling as well earlier this year as governments there stop subsidies for EV purchases and reconsider their ambitious plans to transition from ICE to EVs.

The market share for EVs in the European Union has reportedly shrunk from 14.16% last year to some 12% at the start of 2024.

Local scene

Back home, expectations are high that cheaper EVs would soon dominate the landscape and sales of the auto industry, especially once Proton and Perodua get into the EV-making business.

Proton New Technology Sdn Bhd (Pro-Net), which is a unit of Proton that’s selling the smart #1 EV, says it is actively working to make BEVs more accessible through initiatives such as affordability programmes and expanding charging networks.

“Malaysians can look forward to a future with more affordable BEVs, reflecting evolving market dynamics. Current pricing strategies by industry players strike a balance between affordability and essential factors such as acceptable range and car specifications, performance and ecosystem support,” Pro-Net’s chief executive officer Zhang Qiang tells StarBizWeek.

“It is foreseeable that EVs will become prevalent in Malaysia, much like in countries such as China, but this transition will take time. Several factors need to align for widespread adoption to occur,” he notes.

Zhang says Proton remains committed to its vision of launching its own BEV sooner than 2027.

It believes the fast growth in the EV industry will continue this year even as it is still growing from a small base.

“The market share for BEVs has seen significant increase. The EV sales volume has increased from 3,079 units in 2022 to 11,624 units in 2023, and the market share has increased to 1.45% from 0.43%.

“Many new products like the smart #1 and Tesla Model 3 have been launched, reinforcing our belief in the market’s potential for fast growth in the coming years,” Zhang says.

But he also notes that the success of Malaysia’s BEV ambitions hinges on factors like affordability, range and charging availability.

“While Malaysia is progressing in the BEV sector, continued investment in research and development, innovation in battery technology, and policy support for BEV adoption are needed for the country to establish itself as a regional BEV powerhouse,” he adds.

He expects further deployment and development of charging infrastructure locally, thus alleviating range concerns and bolstering consumer confidence in EVs as sales of such vehicles rise.

“Collaborative efforts between government bodies and private companies ensure continuous improvement in charging networks, further incentivising BEV adoption,” he adds.

Leading the change

Meanwhile, mass production of Perodua’s EV is expected to start at end-2025, according to the Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz.

This is in line with Perodua’s appointment as the lead in production of affordable EVs under the New Industrial Master Plan 2030.

In the completely knocked down (CKD) space for EVs, apart from Proton and Perodua, several companies have so far come public with their plans to venture here.

BYD is another major player in the EV space in the country which distributes its vehicles locally via a distribution agreement with Sime Darby Motors.

Another company, Chery Auto Malaysia will reportedly start local CKD assembly for the Chery Omoda E5 EV crossover in the second quarter at Sime Darby’s Inokom plant in Kulim, Kedah.

While NexV Manufacturing Sdn Bhd, which is a joint venture (JV) between Malaysia-based glove maker Careplus Group Bhd and EV company GoAuto Group Sdn Bhd, will build a new energy vehicle (NEV) manufacturing and assembly plant in Rembau, Negri Sembilan.

The plant has a planned capacity of 30,000 vehicles per year wherein a-third will comprise the assembly of Neta models through the JV partnership.

The JV-co said it is also open to working with other NEV brands that want to assemble CKD passenger and commercial EVs or electric motorcycles in this plant.

Another company which is venturing into this CKD EV space is Bursa Malaysia-listed EP Manufacturing Bhd which has broken ground on a RM100mil semi-knocked-down facility in Melaka to scale up manufacturing operations dedicated to energy-efficient vehicles (EEVs) and EVs.

The company aims to start phase one of production in the third quarter of this year and plans to hit a production milestone of 6,000 units by the end of 2024.

“By 2026, we project to ramp up production to 30,000 units annually,” its group CEO Ahmad Razlan Mohamed says.

EP Manufacturing has entered into a collaboration agreement with China’s Great Wall Motor for local assembly and manufacturing of prominent GWM models such as SUVs, pick-up trucks and EVs.

It has also signed a memorandum of understanding with Beijing-based BAIC International Development Co Ltd to produce selected models of their SUVs, ICE vehicles and EVs for Malaysia and other South-East Asian markets.

With its substantial investments here in this space, Ahmad Razlan also expects BEV to be the future of cars in Malaysia and expects sales of EVs to be on a significant growth trajectory in the near future.

“The significant growth anticipated is despite the current price advantage of ICE vehicles. The global shift towards sustainable transportation solutions, coupled with increasing awareness of environmental concerns and government initiatives to promote clean energy adoption will continue to drive the demand for BEVs,” he says.He points out that a total of 10,159 passenger and commercial EVs were sold in Malaysia last year, from 2,631 units sold in 2022.

“The number of hybrid vehicles sold in 2023 was 28,055 units (up from 2022’s 19,988 units). Both fully electric and hybrid cars combine to give a total number of 38,055 electrified vehicles sold in Malaysia in 2023. We can see the rising demand,” Ahmad Razlan says.

“There are long-term benefits of BEVs beyond just the initial purchase price because BEVs offer lower operational costs, reduced maintenance requirements and contribute to a cleaner environment,” he adds.

He also envisages a time when EVs would become more affordable eventually in the sub-RM100,000 range, especially when battery technology advances and economies of scale drives down production costs.

“We understand the importance of affordability in driving widespread adoption of EVs. While it’s difficult to predict exact timelines, I firmly believe that the foreseeable future holds promise for making EVs more accessible and competitive in the market, particularly in the CKD segment,” he says.

EP Manufacturing notes it is also seeing a positive uptake of its BEV two-wheelers called Blueshark with local sales rising, especially in the logistics and food delivery industries.

“However, it’s crucial to acknowledge that the full realisation of the potential of electric two-wheelers hinges also on the development of supporting infrastructure, particularly charging and swapping stations. Blueshark currently has 15 battery swapping stations across the Klang Valley and targets to expand this to 50 by the end of 2024,” Ahmad Razlan says.

Thus, it is becoming apparent that the widespread availability of charging stations, quicker charging times and improvement in battery technology will be the main factors that hold the key to advancements in the local EV sector.

Pro-Net’s Zhang notes: “As BEV sales rise, so does the deployment of charging infrastructure, alleviating range concerns and bolstering consumer confidence in electric vehicles.”

A wide charging network plays a key enabling role to encourage EV adoption among the masses.

On this front, Petroliam Nasional Bhd’s unit, Gentari, is the largest fast-charging network provider in Malaysia as certified by the Energy Commission.

But providing charging services is not as easy as thought as most EV charging service providers globally are still operating at a loss.

Overcoming this hurdle would be key to increasing charging networks in any country – and a good charging network is key, especially to deal with range anxiety among EV owners.

BloombergNEF noted earlier this month that charging operators, who make money from electricity sales, are not profitable, but some companies here have begun to generate positive earnings before interest, depreciation and amortisation.

In Malaysia, Tengku Zafrul acknowledged in January this year that the number of EV charging stations in the country at 1,500 is still far from the initial target outlined under the Low Carbon Mobility Development Plan 2021-2030.

Tengku Zafrul reportedly said the target of 10,000 EV charging stations operating in the country by 2025 will also be reviewed.

He noted that setting up such charging stations involves many processes and agencies, including the Energy Commission, local authorities and other parties.

The minister said there are plans to make the approval process more seamless and quicken the approval period, following feedback that setting up a charging station is taking too long a time.

Based on these, it is likely that when a more widespread charging network is present in the country with improved charging wait times, that EV sales will pop even further as range anxiety dissipates.

Source: The Star

Will EVs take off in Malaysia?

Malaysia’s vibrant semiconductor industry has been the talk of the town of late as the country emerges as a new semiconductor powerhouse with the global spotlight on Penang.

The World Economic Forum (WEF) stated on its LinkedIn page that Penang has major industry players from Europe and the United States setting up units or expanding existing operations as they seek to build new global supply chains for these vital components.

“Semiconductors are also known as microchips or integrated circuits, they are the fundamental building blocks of today’s digital world,” it said in a video post today.

It noted that there are more than 100 billion semiconductors in daily use around the world, but the supply chain is increasingly vulnerable because semiconductor manufacturing is highly concentrated.

According to the WEF, Malaysia has become a destination for those seeking new options.

“In 2023, Penang attracted US$12.8 billion in foreign direct investment. More than in the previous seven years combined, Intel, for example, has invested US$7 billion (US$1 = RM4.76) in a new plant in Penang,” it noted.

Prime Minister Datuk Seri Anwar Ibrahim posted the WEF video on semiconductor on his own Facebook account and said that under the MADANI Government, Malaysia is committed to building a new, high-tech, innovation-driven future for the country. “With high value investments from global firms, resulting in high-paying jobs for more Malaysians, I have absolute confidence in the potential of every Malaysian, in the bright prospects for our economy, and our shared future as a nation,” he said.

Similarly, Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz posted the same WEF video on his ‘X’ platform with the caption ‘Malaysia – the new semiconductor powerhouse’.

Besides the WEF, major media also reported that Penang has in recent years won new chip sector investments from multinationals, including Lam Research, Infineon Technologies, Texas Instruments, Micron Technology, Bosch, Advanced Semiconductor Engineering (ASE) and Intel.

According to the international media, the investments have reinforced Malaysia’s entrenched position in the late stages of the semiconductor supply chain, particularly chip assembly, testing and packaging, areas in which it holds a 13 per cent share of the global market.

“Chip design could be a more promising area for Malaysia than fabrication. A few local companies, such as Oppstar Technology, can already provide design services for advanced chips.

“Malaysia must quickly seize opportunities in chip design to move up the semiconductor value chain as competition intensifies,” one report said.

The international media also noted that when Oppstar listed on the Malaysian stock exchange last year, investors flocked to the initial public offering despite a globally weak public listing activity and that it was oversubscribed by 77 times, pushing the stock price up 286 per cent on the first trading day.

Founded in 2014, Oppstar designs transistor models used for chips from the 20-nanometer level and below, all the way to the most advanced three-nanometer chips.

Source: Bernama

Global spotlight on Malaysia as it emerges as semiconductor powerhouse

Penang is set to become a catalyst for Malaysia to move up the chip value chain and solidify its position as the preferred investment destination for electrical and electronics and semiconductor production in the region, said Chief Minister Chow Kon Yeow.

He said with over 50 years of industrial excellence and leadership, Penang can contribute to Malaysia’s goals as envisioned in the New Industrial Master Plan 2030 (NIMP 2030).

Chow noted that Penang, dubbed the “Silicon Valley of the East”, has always championed back-end chipmaking processes within the country and the region while the state has consistently played a pivotal role in contributing to Malaysia’s annual gross domestic product (GDP) growth.

“However, for Penang to contribute further to Malaysia’s attainment of a high-income nation, bold and innovative ideas are required not just from foreign firms but from the grassroots.

“Therefore, local tech startups that hone skills in integrated circuit design and research and development are capable of pushing Malaysia further up the value chain,” the chief minister said in a Facebook post today.

Earlier, Nikkei Asia published an article, titled “Malaysian ‘Silicon Valley’ seeds homegrown chip startups”, highlighting that the time is ripe for Malaysia to move upstream into chip designing.

Chow, who is also the state Finance, Economic Development, Land and Communications Committee chairman, pointed out that Penang’s growth trajectory looks promising with Penang International Airport expansion and Silicon Island in the pipeline.

Touching on the Penang Light Rail Transit (LRT) Mutiara Line project, he said that from boosting the property market to potentially attracting foreign direct investments, the long-awaited LRT project signifies a significant step towards more equitable development across all states.

“The LRT project is not only a relief for those who battle traffic congestion during festive seasons but also holds promising economic benefits, as highlighted by analysts,” he noted.

The federal government officially took over the LRT project from the state government following the Cabinet’s decision to approve the suggested development of the project on March 22, 2024.

Source: Bernama

Penang on track to become catalyst for Malaysia to move up chip value chain: Chief Minister

Former Intel engineers attempt to push Penang to higher end of value chain

When chip design company Oppstar listed on the Malaysian stock exchange last year, it was a watershed moment for the Southeast Asian country and its ambitions to revitalize its semiconductor industry.

Amid globally weak public listing activity, investors flocked to the initial public offering, the first by a chip design house on the local bourse. It was oversubscribed by 77 times, pushing its stock price up 286% on its first trading day.

“Being the first one is always tough,” founder and co-CEO Ng Meng Thai told Nikkei Asia. “When we started the IPO process, we feared that many local investors might not know our industry well. So it took us an effort to go and explain.”

Since then, executives from leading American, Japanese and European chip firms have been regular visitors to the company’s office in Malaysia’s northern state of Penang, where its staff of 280 design chips to clients’ specifications.

“It’s been quite a change from the early days, when we were knocking door to door,” said Ng, a 59-year-old former Intel designer. “We were the very few that went against all odds.”

But the fact that Oppstar is the only chip design company listed on the Kuala Lumpur stock exchange is also a sign of how far the country — once known as the ‘Silicon Valley of the East’ — still has to go if it is to return to its former tech glory.

“We would need more Malaysian front-end companies to excel and have an increased significant presence on the international stage in order to lift the country’s profile within the front-end markets,” said Steven Chan, senior equity analyst at Malaysia’s Affin Hwang Investment Bank.

The state of Penang has been known for decades as a cluster for back-end chipmaking processes, including packaging, assembly and testing, which are less advanced than wafer fabrication and other so-called front-end processes.

Startups like Oppstar are looking to change that by breaking out of the back-end and into areas like chip design.

Malaysian Trade Minister Zafrul Aziz says the government seeks to foster such activities. “Nurturing a vibrant startup culture is crucial,” he told Nikkei Asia.

Founded in 2014, Oppstar designs transistor models used for chips from the 20-nanometer level and below, all the way to the most advanced 3-nanometer chips.

“We can work with almost anyone from different industries,” said co-CEO Cheah Hun Wah, who was Ng’s former colleague at Intel.

Unlike the global chip giants Intel and Nvidia, which mainly design and sell their own branded chips, Oppstar is a contract designer, developing bespoke chips for clients. These designs are then manufactured by dedicated makers known as chip foundries.

Oppstar says its experience with various foundries, which all have their own complex set of rules, has allowed it to secure projects from global clients as supply chains shift in response to geopolitical tensions.

Malaysia has emerged, or rather re-emerged, as a major destination for chip investment as companies like Intel and Infineon Technologies seek to diversify their production footprints. Since Intel opened its first overseas assembly plant in Penang in 1972, the country has played an important role in the global chip industry. Today it is the world’s sixth-largest semiconductor exporter, and the largest contributor to U.S. semiconductor imports, at over 20% by value annually, more than Taiwan, South Korea and Japan.

But despite its long history in the industry, Malaysia was eclipsed by South Korea and Taiwan in the more technologically advanced areas of chip manufacturing — it has not produced its own version of Samsung Electronics or Taiwan Semiconductor Manufacturing Co. — while the U.S. is the dominant player in chip design.

Failing to get into the front-end is a missed opportunity for Malaysia. Almost 90% of the world’s total semiconductor equipment spending is for wafer fabrication processes, according to industry association SEMI.

“Tapping into that [front-end] market would be crucial in fueling the next stage of [Malaysia’s] semiconductor growth,” said Chan of Affin Hwang Investment Bank.

But fabrication plants are massively expensive — a cutting-edge chip plant built by TSMC or Samsung can cost billions of dollars.

With this level of spending beyond most local companies, Wong Siew Hai, president of Malaysia Semiconductor Industry Association, sees the more asset-light chip design business as a “key area” for newer entrants. “There are now many [venture capital] funds focusing on Malaysia,” Wong said, “and we encourage such talents to seek them for support.”

Fong Swee Kiang, another Intel veteran, shares Wong’s view.

Fong founded semiconductor design house SkyeChip in 2019, shortly after leaving chip developer Broadcom. In charge of global operations at the American company, he was on the frontline as the U.S.-China chip war broke out in 2018.

“There were restrictions on selling to certain customers. We started to feel the force of deglobalization,” Fong recalled of the U.S. export controls first imposed under the Trump administration. But this had a silver lining, he said, as it created more markets and lowered the entry barrier for smaller chip designers. “In the old days, there was one single market [the U.S.] with a lot of giant players.”

As the first local Intel engineer sent to the U.S. for training, Fong was responsible for setting up the company’s design center in Penang, which eventually grew to 1,500 people.

Today, SkyeChip designs AI chips for data centers, automotive and connected devices and boasts a dozen or so of its own patents on next-generation chips and other technologies, according to Fong.

In Asia, the contract chip design sector is crowded with companies like Taiwan’s Faraday Technology, Global Unichip, Alchip Technologies and Japan’s Socionext. While the global on-shoring of semiconductor production, as Fong pointed out, opens up more opportunities for challengers like SkyeChip and Oppstar, industry players say the trend is also exacerbating the long-standing problem of a shortage of qualified chip engineers.

Attracting engineers is a particular problem for Malaysia because of the strong presence of large multinationals offering higher salaries than local companies. Many locals also choose to work in neighboring Singapore, another semiconductor cluster.

“One of the key areas we need to look into is how to grow talent within [Malaysia] and to attract talents from abroad,” said Kalai Selvan Subramaniam, a former Intel designer and CEO of Malaysian chip design firm Infinecs Systems.

Attracting and retaining talent is not the only challenge to growing Malaysia’s chip industry. Investment is booming in Penang, but the cluster still relies heavily on foreign multinationals. The state attracted 60.1 billion ringgit ($12.65 billion) in foreign direct investment in 2023, according to government data, while domestic investment has hovered at around 3 billion ringgit over the years, significantly smaller than the FDI levels.

“FDI is a good thing, but it also has some downsides,” said Experior CEO Eugene Khoo, another former Intel colleague of Oppstar and SkyeChip founders. “It kind of pigeonholed us in the luxury boxes.” Experior tests and verifies new designs before they are put into mass production to ensure the manufacturing process goes smoothly. The company also provides training for universities and companies to help expand the local talent pool.

Developing a more advanced chip industry with a more skilled workforce is critical for Malaysia as other Asian countries with cheaper labor, like Vietnam, Thailand and India are also competing to build up semiconductor sectors. To that end, local officials and industry players say relying on FDI will not be enough.

Loo Lee Lian, CEO of InvestPenang, the non-profit arm of the state government, stressed that FDI is “only one of our areas of focus,” and that the state pushes foreign firms to localize their supply chain, or set up joint ventures as part of the criteria for approving projects.

“To fulfill our aspiration to move out from the middle income trap … we have to move up the value chain,” Loo said. “We cannot be competitive for commoditized products, or products that are too cheap.”

Source: Nikkei Asia

Malaysian ‘Silicon Valley’ seeds homegrown chip startups

The demand for medical and surgical rubber gloves picked up last month despite the prevailing oversupply situation which is expected to be in equilibrium by 2025.

Malaysia Rubber Glove Association’s former president Denis Low Jau Foo told Bernama recently that the uptick in demand was due to customers replenishing their stock.

“There was aggressive buying during the Covid-19 pandemic, those stocks are facing expiry. Medical gloves have a shelf life,” Low said.

It is this replenishment factor that is pushing up demand, Low said.

With demand on an uptrend, prices are also set to rise.

“We are seeing a significant increase in latex price by as much as 28.7%. This means a higher cost for glove manufacturers and this will be passed on to the buyers,” Low said.

Rubber glove manufacturers are the biggest users of bulk latex, consuming close to 460,000 tonnes per annum, he said.

Weather conditions such as El Nino and La Nina are also instrumental in the price rise and rubber price volatility. Stability is possible from June onwards, Low said.

While the uptick in demand is good news for the sector, many glove makers have “switched off production” because of the oversupply situation a few years ago.

“The glove industry is now running at 50% capacity. It is easy to switch off production. To restart it needs collaborative action by all players.

“The government also has to ensure workers’ return, materials and logistics. All these factors need to work in tandem,” Low said.

Malaysia produced up to 230 billion pieces of gloves at the height of the pandemic and prices soared to crazy levels, Low said.

Between 2020 and early 2022, prices reached US$120 to US$140 per 1,000 pieces versus US$18 and US$20 (RM85 and RM95) per 1,000 pieces today.

“The lowest was US$14 for 1,000 pieces earlier this year in China,” he said, adding that the situation in the sector will be more stable in a few months.

Low’s views are in line with RHB Investment Bank’s outlook on the sector.

The research house said sales are expected to pick up by the second half of 2024 given more balanced demand-supply dynamics, leading to improved profitability.

RHB Investment Bank is overweight on the sector. It sees the industry’s “excess capacity gradually phasing out”.

It should achieve demand-supply equilibrium by the end of 2024/2025, it said.

It also expects price competition from Chinese peers to gradually subside, due to rising quality concerns with “higher rejection rates from the US, and as Chinese players’ pivot towards sustainability”.

Kenanga Research reiterates that the current challenging and competitive landscape will persist throughout 2024. While some players have returned to the black, the tepid profitability does not support lofty valuations, it said.

“The industry will continue to face massive oversupply, predatory pricing by certain overseas players, weak demand and high cost of inputs such as nitrile butadiene rubber and latex. Nitrile butadiene rubber prices have moved up since the fourth quarter of 2023,” the research house said.

On a slightly brighter note, it said further decommissioning of older production facilities locally should help to ease supply pressure.

As for the price of latex, Kenanga expects the price to rise due to low production during the “wintering months between December and May”.

Year-to-date, prices have risen by 8% with buyers walking away whenever there is an attempt to raise prices, Kenanga said.

“Chinese manufacturers are still selling at US$16−US$18 per 1,000 pieces, which means any attempt by Malaysian producers to raise prices is likely to result in losing market share,” Kenanga said.

Source: Bernama

Demand, prices for medical, surgical rubber gloves rising: Expert