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Silterra running at full capacity

Silterra running at full capacity

28 Jul 2021

Global chip shortage fuels robust demand

Silterra Malaysia Sdn Bhd, the nation’s largest chipmaker, is presently fully utilising its production capacity and is in a situation of turning away orders from customers, says Dagang Nexchange Bhd (DNEX) group managing director Tan Sri Syed Zainal Abidin Syed Mohamed Tahir.

“There’s a shortage of chips everywhere. Our production capacity is running full blown. The outlook for the capacity utilisation will continue to be steady at least for about a year to a year-and-a-half,” said Syed Zainal during a virtual media briefing after the launch of DNEX’S digital trade and logistics platform Sealnet.

On Monday, DNEX announced it had completed the acquisition of a 60% stake in Silterra for Rm168.3mil cash from Khazanah Nasional Bhd.

Beijing Integrated Circuit Advanced Manufacturing and High-end Equipment Equity Investment Fund Centre (CGP Fund) owns the remaining 40%.

Silterra is involved in the manufacture of semiconductor wafers and supplies multinational fabless and integrated device manufacturer companies.

Syed Zainal added that DNEX has committed about Rm200mil “for the first couple of months to invest in the right tools and equipment, and to also remove some of the production bottlenecks”.

“By making available this investment, the additional capacity that’s already existing in Silterra today will then increase by about 5% to 10%.”

Syed Zainal also pointed out that there were plans to fine-tune Silterra’s product portfolio and selling prices.

“There are opportunities to provide an improved portfolio mix. We know what needs to be done today because we bring in our subject matter experts from our consortium partners from CGP and also from other industry players.

“This will increase the revenue and margins,” he said.

He added that announcements will be made in the near term on Silterra securing new long-term customers.

“We want a stable customer base. We can plan better and optimise the efficiency at the plant – particularly the production planning.”

Syed Zainal noted that Silterra was also looking into opportunities to supply to the automotive industry.

“We also are looking for opportunities to go further downstream, especially with products using our own proprietary technology. We have partners who are already in the space.

“The question is what is the right business model. I think the day will come when we want to look at how we can go into providing chips, and components, and finished products to the automotive industry, particularly in this electrification of cars.

“Whether we want to do it alone or via investments, or a consortium – those are the details that we need to work out but that is something I would like to pursue,” he said.

Meanwhile, Sealnet is a digital trade and logistics platform that provides one-stop cloud-based logistics and cross-border services to ease trade processes.

It is targeted at importers, exporters, manufacturers and trade-related businesses.

“With Sealnet, we are looking to address the pain points that have hindered efficiency and contributed to unnecessary costs in the industry,” said Syed Zainal.

All lodged applications and submissions, be it domestic or international, can be done through Sealnet.

Sealnet also has real-time goods tracking technology where traders can instantly track status of document, approvals and cargo in real time.

Syed Zainal said he expects Sealnet’s revenue to grow 300% for the current financial year ending June 30, 2022 (FY22).

“The (revenue) base is very low. We are providing needed services, and as always, we are very competitive.

“Our value is when the customer realises that what we provide, gives them the cost competitive edge.

“I’m quite sure that revenue will continue to grow and eventually, it will contribute to the profit of DNEX.”

Syed Zainal said Sealnet aimed to be the trade facilitator partner of choice.

“We want to be the global trade digital connector. We have the infrastructure, the right people, and now, the platform.

“We also provide the linkage with all the government agencies such as the Royal Malaysian Customs Department and International Trade and Industry Ministry,” he said.

Source: The Star