South Korean company OCI Holdings has reaffirmed its commitment to continue expanding production in Sarawak with a potential reinvestment value of RM3.1 billion in polysilicon for photovoltaic use.

Sarawak Deputy Premier Datuk Amar Awang Tengah Ali Hasan said in a press statement this expansion is expected to create 400 direct employment opportunities.

Awang Tengah, who is also International Trade, Industry and Investment Minister, said OCI Holdings is a global chemical company producing polycrystalline silicon, hydrogen peroxide, and other chemical-related materials.

He led a Sarawak delegation to meet with OCI Holdings chairman Lee Woo Hyun in Seoul, yesterday.

In 2017, OCI Malaysia Sdn Bhd (OCIM) acquired 100 per cent stake of the polysilicon production facility in Malaysia owned by Tokuyama.

Currently, OCIM has invested over RM8 billion in Sarawak to produce polysilicon for solar industries.

OCIM will further expand and diversify its production in chemical materials in Sarawak.

The company has a joint venture with Kumho and Tokuyama to produce epichlorohydrin and semiconductor grade polysilicon respectively.

“These investments are worth more than RM3.2 billion, which is expected to create 400 new jobs,” Awang Tengah said in the statement.

Lee also expressed OCI Holdings’ interest to further explore potential investment in power development, especially renewable energy in Sarawak through subsidiary OCI Energy.

This proposal was welcomed by Awang Tengah as it underscores Sarawak’s commitment to be a leader in green energy.

“Their participation in green power development will further enhance the energy security of Sarawak whilst contributing to sustainable economic growth and environmental stewardship,” he added.

OCI is a global company with a significant focus on renewable energy and energy storage systems.

Currently, OCI Energy is the largest independent solar developer in Texas, United States.

Source: Borneo Post

South Korea’s OCI Holdings reaffirms Sarawak production expansion, potential RM3.1 bln reinvestment value

iMin Technology, an Androidbased point of sales (POS) hardware and platform provider based in Singapore, has opened its first production facility outside China in Senai here.

Chief executive officer Hu Aimin said the cutting-edge facility, operated through Neostra Sdn Bhd, represents a significant milestone in the company’s expansion strategy in enhancing its manufacturing capabilities and strengthening its supply chain to meet the global demand from its fast-growing clientele while leveraging on Malaysia’s competitive edge.

“Malaysia offers a conducive environment for business growth, with its robust infrastructure, skilled workforce and supportive government policies.

“Our decision to establish a manufacturing facility here is a strategic move to tap into the vast opportunities that Malaysia presents,” he said in a statement today.

He said the facility’s opening marked the start of more than just an expansion but the beginning of a dynamic exchange of knowledge and expertise.

Hu said iMin’s deep industry knowledge and advanced technological capabilities would facilitate a valuable transfer of information and skills to the local workforce and industry partners.

“The integration of global expertise with local insights will drive innovation and elevate industry standards, creating a collaborative environment that will benefit both iMin and the broader business
community in Malaysia.

“We are confident that our presence in Malaysia will not only enhance our production capabilities but also contribute significantly to the local economy and community,” he said.

The ceremony was graced by the state’s Investment, Trade, Consumer Affairs and Human Resources Committee chairman Lee Ting Han, Malaysian Investment Development Authority (MIDA) Singapore director Vinothan Tulisinathzan and MIDA Johor director Mohamad Reduan Mohd Zabri.

Meanwhile, Lee said iMin’s strategic decision to set up a production facility in Johor reflected a strong vote of confidence in the country’s robust economic policies, political stability and business regulations.

He added that Malaysia and Singapore shared a robust and mutually beneficial economic and trade relationship and this collaboration would serve to keep the positive momentum going while creating jobs and fostering innovation between the two nations.

Source: Bernama

iMin Technology opens first production facility outside China in Johor

PANTECH Group Holdings Bhd (KL:PANTECH) is working towards the listing of two of its five manufacturing units on Bursa Malaysia as soon as practicable, in a move aimed at raising funds for expansion as well as gaining the group recognition as a maker of steel products rather than just a trader.

“The new listco is intended to uplift our profile as a global manufacturing business among new overseas clients since Pantech Group has historically been known as a trading company. Looking at the group’s historical price-earnings ratio (PER) of about seven to nine times, that shows us that Pantech is still regarded as a trading company, even with very viable manufacturing operations,” Pantech Group executive director Adrian Tan tells The Edge in an interview ahead of the group’s annual general meeting (AGM) on July 30.

Given Pantech’s financial performance, he says the group should be trading at “more than 10 times” PE multiples rather than single digits (see profitability chart).

“Internally, we have earmarked and prepared key personnel to move over to the new listed company (listco),” he adds, noting that an extraordinary general meeting (EGM) for shareholders’ approval will only be called once regulatory approval has been received.

When asked if the listing would happen this year, Tan says: “We are working diligently to secure all necessary approvals and will make the necessary announcements once more details are confirmed [or when there are updates from] the regulator.”

Going by the typical timelines for corporate exercises, if regulatory approval does not come within the next three months, it is likely that the listing will happen next year at the earliest as there needs to be 21 days’ notice to call an EGM and time to prepare the circular to shareholders. Tan declines to provide a timeline for the exercise.

In Pantech’s announcement to the stock exchange on April 25, the company said “it is essential for shareholders to note that the proposed listing may or may not realise as there is no guarantee that the required approvals would be obtained or the proposed listing [of Pantech Stainless & Alloy Industries Sdn Bhd (PSA) and Pantech Steel Industries Sdn Bhd (PSI)] will proceed”.

Tan says Pantech has submitted documents to the Securities Commission Malaysia (SC) to secure approval for the listing and is awaiting the green light. While the proposed exercise is not on its July 30 AGM agenda, the management expects to field questions on it.

He explains that the objective of the listing is to derive better valuations for the group’s two 100%-owned global manufacturing units PSA and PSI, which are “doing extremely well, have good margins and collectively contribute about 70% to the group’s manufacturing division”.

Main Market-listed Pantech has two main divisions, trading and manufacturing, both of which contribute almost equally to group revenue.

Pantech supplies products such as pipes, valves and fittings (PVF) flanges and other fluid transmission-related products to its customers in various industries locally and overseas. For the overseas market, 20% of revenue comes from its trading division and 70% from manufacturing. Its three biggest export markets are the US, Europe (Pantech owns UK-based Nautic Steels Ltd, which supplies to the continent) and the Middle East.

“We have been looking at expanding into South America and Africa. Pantech has established markets in the US and Europe, where we receive steady streams of orders. We are growing our South America presence for our products and hoping to make further inroads into the North African region. There is also interest from Egypt and Tunisia, so we’re hopeful about that,” says Tan.

On the proposed listco’s prospects, he says PSA and PSI serve about 30 export markets.

“The margins are good. Gross margins for the global business are at least 30% with sustainable net margins of 10% and 11%. The net margin for the group, as a whole, was 11% in FY2024. A few smaller manufacturing companies cater mainly to the local market and neighbouring countries, namely Thailand and Indonesia.”

Tan declines to elaborate on how much the flotation exercise is expected to raise or the likely market capitalisation of the listco but does say the proceeds will help the latter’s expansion plans.

“The listco will buy over Pantech’s manufacturing plants in Johor and Klang, which are currently being rented. The IPO proceeds will also be used to acquire technological upgrades to boost manufacturing capacity by another 20% to 25%. Some of the equipment needs to be modernised so as to reduce over-reliance on labour,” says Tan, declining to divulge the capital expenditure involved.

According to Pantech’s 2024 annual report, PSA and PSI had annual capacities of 21,000 tonnes and 18,000 tonnes, and had achieved 90% and 80% output respectively. In terms of tonnage, the companies make up nearly half of the 87,800-tonne total capacity at four of its manufacturing units. A fifth manufacturing unit, Unity Precision Engineering Sdn Bhd, has an annual capacity of 60,000 hours with 80% output achieved (see table). Pantech’s trading arm has a portfolio of more than 30,000 PVFs and ancillary products sourced globally, which make up an inventory worth RM198.11 million and contributed revenue of RM510.98 million to the group in FY2024. The manufacturing division contributed RM435.65 million.

It owns another facility in Johor following the acquisition of metal precision machining, engineering and turnkey solutions outfit Unity Precision Engineering Sdn Bhd for RM13 million in 2022. It also owns a galvanising plant in Johor and a plant in the UK, Nautic Steels, that produces fittings in special metals (copper nickel & nickel alloy).

Pantech was certified as one of only two companies operating in Malaysia to be genuine manufacturers of carbon steel buttweld fittings, in anti-circumvention crackdowns by the US Department of Commerce in 2018 and by the European Union (EU) in 2022.

“Pantech was only serving about a handful of European customers when the EU’s crackdown took place. But we gained new customers after being cleared by the authorities,” Tan points out.

Locally, the group has enjoyed a steady flow of orders from the engineering, procurement and construction contractors of projects such as that of Sarawak Shell Bhd at the F22, F27 and Selasih (FaS) gas field development off the coast of Sarawak as well as Petroliam Nasional Bhd’s Kasawari 1, a carbon capture and storage project, located off Sarawak, and the Jerun gas field development, also in the state.

“This past [financial] year, we have been doing rather well because there have been lots of projects like FaS. We supplied to Petroliam Nasional Bhd’s Kasawari 1, and we’re now on to Kasawari 2, to which we will continue to supply until its completion later this year,” says Tan.

“Contributions from the oil and gas sector still make up 40% of Pantech’s local maintenance orders as players have a major turnaround every three to four years alongside regular upkeep every six months. One of these projects, for instance, will need its maintenance next year so we have to be prepared to take their orders on.”

As at June 30, 2024, Pantech’s order book stood at RM400 million, with deliveries expected to be completed by next February.

For the fourth quarter ended Feb 29, 2024 (4QFY2024), Pantech registered a 21.6% higher net profit of RM28.7 million from RM23.6 million last year, on a 16.6% improvement in revenue to RM229.7 million. However, because of softer sales and lower average selling prices (ASPs), FY2024’s net profit of RM105.3 million was 9% lower than the RM115.6 million in FY2023. Revenue was 8.8% weaker y-o-y at RM946.3 million.

Tan explains that there was a sharp increase in freight rates in 2022 and in the price of raw materials then because of the Russia-Ukraine war, leading to a significant increase in ASP. “But [FY2024] was stable, with lower ASP and lower raw material prices, such that Pantech has continued to make good profits.

“In terms of revenue growth, we’re confident of a 10% increase in FY2025,” Tan adds, without commenting on earnings.

While Pantech does not have a dividend policy, it typically pays out 40% to 50% of its profits to shareholders. When the pandemic broke out, the group continued to pay out 1.89 sen and 2.3 sen a share in FY2020 and FY2021 respectively. It raised the annual payout to four sen a share in FY2022, followed by a record high of six sen a share in FY2023 and FY2024.

Impact on Pantech, prospects for listco

Although Pantech has yet to announce details on the proposed IPO, fund managers and an analyst whom The Edge spoke to believe there will be an issuance of new shares for the listco. This, they say, could have a dilutive impact on Pantech’s earnings, thus lowering profit attributable to its shareholders and causing downward pressure to the share price.

Year to date, Pantech has risen 23.3% to close at RM1.11 last Wednesday (July 17), reflecting a PER of 8.76 times.

“To make up for the shares carved out for the spin-off, Pantech will need at least 30% to 40% in earnings growth next year. Pantech’s anticipated capacity boost of 20% to 25% will help, otherwise earnings per share could drop substantially. But looking at Pantech’s strong balance sheet, I believe it can still pay annual dividends of six sen per share for the next three years and still be in a net cash position,” surmises the analyst, who declines to be named.

“For a counter related to the oil and gas industry, a dividend yield of 5.5% makes Pantech a great dividend stock, even if it is categorised as part of the industrial products and services index,” the analyst says.

The fund managers and analysts believe that the listco will garner investor interest if priced well, given that Pantech has built a commendable export business.

“We still don’t know the indicative PE for the listco, but assuming it will be at 12 times looking at other similar manufacturers of steel products which are trading averagely at a forward PE of 10.5 times, I would ascribe a premium to Pantech’s spin-off based on its historical performance. I would say that’s a fair PE for the listco,” says the analyst, who remains “neutral” on the listing based on a lack of concrete details and the expected dilution to EPS.

Bloomberg data shows that the two analysts covering the stock have “buy” calls with target prices of RM1.23 and RM1.35, indicating upside of at least 10.8%. But that is without pricing in the impact of the flotation exercise, given scant information on the matter.

“Management probably thinks a separate listing for the manufacturing division could give it a better valuation than what it is getting … Sometimes, splitting the company could be for succession planning such as enabling family members to take charge of the separate entities. Only time will tell [the real reason],” observes a fund manager. 

Source: The Edge Malaysia

Pantech eyes better valuation with manufacturing unit IPO

Efforts are already underway to identify suitable locations for Selangor’s second Integrated Circuit (IC) Design Park as the state continues its push in the semiconductor industry.

This is despite the first IC Design Park in Puchong — the first of its kind in Malaysia — yet to be officially launched.

According to state executive councillor investment, trade, and mobility Ng Sze Han, this initiative is driven by the high demand from industry players, and discussions with the Federal government pertaining to the second park are ongoing.

“The first IC Design Park in Puching is already at full capacity. We are currently in the process of identifying a suitable location for IC Design Park 2.0.

“Subsequently, we will consider further expansion if there is sufficient demand,” he told the press after a site visit to Jalan Puchong Jaya to monitor the road expansion works today.

Ng added that developing IC Design Parks requires significant financial allocation.

The Selangor IC Design Park, located at the Puchong Financial Corporate Centre (PFCC) and developed by the state government, is set for launch on August 6.

The park will provide access to design tools, servers, as well as intellectual property and training programmes to support local and international IC design companies.

It is expected to generate over 300 high-value jobs for IC design engineers in its first year.

Meanwhile, the councillor said the development of new design parks will not be limited to industrial areas, with the state also considering land on commercial zones.

“There are actually many suitable locations available that we can offer, including commercial areas. But there are specific criteria that we need to comply with to meet the demands of the companies in this industry.

“These include a stable electricity supply, 5G connectivity, and access to public transportation,” he said.

Similarly, Ng said sufficient electricity and water supply are also crucial criteria for operating data centres, another industry that Selangor is currently focusing on.

“We are currently equipped to meet the needs and demands of data centres.

“However, we must exercise caution to ensure that the data centres coming into Selangor are genuinely necessary and not arbitrarily established. They should align with the ecosystem requirements in Malaysia,” he said.

Earlier today, Selangor Journal reported Selangor Information Technology and Digital Economy Corporation’s chief executive officer Yong Kai Ping as saying that the state is looking to launch an IC Design Park every year until 2028.

Source: Selangor Journal

Selangor IC Design Park 2.0 in the works

X-FAB Sarawak Sdn Bhd, a subsidiary of X-FAB Silicon Foundries SE, on Monday hosted a visit by federal Investment, Trade and Industry Minister Senator Tengku Datuk Seri Zafrul Tengku Abdul Aziz and a delegation of approximately 40 members.

X-FAB Group board of directors chairman Tan Sri Hamid Bugo was present to welcome the delegates, the company said in a press statement today.

During their visit, the minister was given a tour of the state-of-the-art facilities by X-FAB Sarawak chief executive officer Lee Boon Chun, who said the Kuching site was the largest and most modern manufacturing facility within the X-FAB group which also runs production sites in Germany, France and the United States.

This visit came at a significant time as X-FAB Sarawak was expanding its capacity.

“A new building is under construction, which will feature additional clean room space essential to meet the strong demand for X-FAB’s specialty 200mm CMOS technology, in particular its popular 180nm automotive processes.

“Every new car worldwide has on average more than 20 chips made by X-FAB inside.

“In the dynamic landscape of semiconductor manufacturing, it is with immense pride that we showcase the expansion of X-FAB Sarawak,” Lee was quoted as saying.

“The addition of a new building equipped with cutting-edge clean room facilities for our 200mm CMOS technology is a testament to our relentless pursuit of excellence,” he added.

“Hosting the honourable Minister Tengku Zafrul Aziz, along with his delegation, provides us with the unique opportunity to demonstrate our advancements and our unwavering commitment to contributing to the industry’s growth.

“We are not just constructing buildings and expanding capacity; we are building the future for X-FAB’s specialty technologies here in Kuching,” said Lee.

The progress of the construction is on schedule, with the equipment move-in planned for the fourth quarter.

X-FAB is the leading analogue/mixed-signal and MEMS foundry group manufacturing silicon wafers for automotive, industrial, consumer, medical and other applications.
Its customers worldwide benefit from the highest quality standards, manufacturing excellence and innovative solutions by using X-FAB’s modular CMOS and SOI processes in geometries ranging from 1.0µm to 110nm, and its special silicon carbide and MEMS long-lifetime processes.

X-FAB’s analogue-digital integrated circuits (mixed-signal ICs), sensors, and micro-electro-mechanical systems (MEMS) are manufactured at six production facilities in Germany, France, Malaysia and the US. X-FAB employs approximately 4,500 people worldwide.

Source: Borneo Post

Tengku Zafrul tours X-FAB Sarawak’s facilities

Selangor has set an ambitious goal of nurturing at least 10 home-grown integrated circuit (IC) design companies within the next five years as it shifts the focus towards the semiconductor industry’s front-end. 

State executive councillor for investment, trade, and mobility Ng Sze Han said the landmark development of the Selangor IC Design Park in Puchong, scheduled for launch next week, is crucial to move Malaysia up the semiconductor value chain. 

While states like Penang and Kedah are currently heavily focused on back-end processes like packaging and testing, it is Selangor’s goal of emphasising on the front-end of design and innovation. 

“I believe it will create a very big economic impact on Selangor and Malaysia. What we want to see is the cultivation of homegrown semiconductor talents and companies that can compete on a global scale. 

“At this moment, Malaysia is very strong on the back-end. What we are focusing on is the front-end. We want to help Malaysia build a more complete ecosystem. 

“So, our target for the next five years is to hopefully develop ten homegrown IC design companies,” he said as a guest during a recent BFM’s Top Story podcast.  

Ng added that Selangor is also working closely with the Federal government to attract more quality IC design firms into the country and retain local talents, with the Selangor IC Design Park an example of efforts undertaken by the state to realise these goals. 

He said the park is expected to create about 300 high-paying engineering jobs, with competitive starting salaries of between RM5,000 and RM7,000 for fresh graduates. 

“The ripple effect from this will benefit other businesses and industries as well, including restaurants, real estate, and logistics. 

Earlier today, Selangor Journal reported Selangor Information Technology and Digital Economy Corporation’s chief executive officer Yong Kai Ping as saying that the state is looking to launch an IC Design Park every year until 2028.

He said Selangor wants to leverage the success of its first IC Design Park in Puchong, which is already at full capacity, with plans already underway for more similar parks in the coming years. 

On what Selangor is doing to ensure its local workforce is competent enough to fill up vacancies following an increase in investments, Ng said the state government is developing different types of upskilling programmes in collaboration with industry players. 

Previously, it was reported that Selangor had secured 363 projects valued at RM12.4 billion in the first three months of this year, creating 8,377 employment opportunities.

The investment value represents a 66.8 per cent increase from the RM7.44 billion in the same quarter of the preceding year.  

Meanwhile, when asked how Selangor is managing the increased demand for power and water as a result of the development of more data centres in the state, the councillor said Selangor will have to carefully decide which of these projects are the most needed. 

He cited Google’s US$2 billion (RM9.25 billion) investment in Malaysia as an example, which will include the development of its first Google data centre and Google Cloud region at the Elmina Business Park in Sungai Buloh. 

The investment is expected to generate over 26,000 jobs across various sectors including healthcare, education, and finance, and is crucial to the semiconductor ecosystem. 

Source: Selangor Journal

Selangor eyes ten homegrown IC design firms in five years

The Selangor administration is looking to launch an Integrated Circuit (IC) Design Park every year until 2028, said Selangor Information Technology and Digital Economy Corporation (Sidec) chief executive officer Yong Kai Ping.

Yong said the state wants to leverage the success of its first IC Design Park in Puchong.

“The IC Design Park in Puchong is already at full capacity. The next step is the official launch of the design park in August this year, where we will see nine companies coming in, and we aim to fulfil the immediate need of 400 trained engineers, potentially expanding to 600.

“But there are already plans for a second park, which is anticipated to launch next year. The long-term vision includes launching a new park each year, aiming for four or five parks over the next four years,’’ he told Selangor Journal on the sidelines of the First Series of the Selangor International Business Summit (SIBS) 2024, held at the Kuala Lumpur Convention Centre from July 25 to 27.

Yong explained that Sidec aims to boost the semiconductor industry, particularly in the IC design aspect, in hiring and retaining talents, to meet a global, critical need.

Yong briefly said the main issue is the demanding nature of the semiconductor industry, which requires a combination of skills in electrical and electronic engineering, mechanical engineering, and computer science.

“For IC design, companies would often only hire those with master’s degrees. To help with this issue, we aim to increase on-job training for degree holders, and promote master’s programmes with universities such as (Universiti Malaya) and (Universiti Kebangsaan Malaysia), as well as international collaborations with Taiwan, China, and Japan.

“Our overall strategy includes training 2,000 IC engineers over the next four years, with a target of 400 to 500 engineers per year. This includes not only fresh graduates, but also senior engineers returning from abroad,’’ he said.

Apart from the collaborations to expand local training programmes in specialised areas like IC design, Yong said Sidec is also looking to develop training plans for local graduates to produce semiconductor equipment.

“There is a focus on semiconductor equipment production — a lucrative but underdeveloped area in Malaysia. I think this could create opportunities for our Technical and Vocational Education and Training students.

“Overall, our model is very straightforward. By opening more centres and attracting more companies, we can recruit and train the necessary engineers. These programmes are also supported by the positive response from industry players, who are always eager for more talent,’’ he said.

Source: Selangor Journal

Selangor plans to launch an IC design park each year until 2028

The government has proposed that Sarawak becomes Malaysia’s hub for the aerospace industry, said Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz. 

He said the proposal was one of the discussion points during the Sarawak Industry Coordination Joint Committee Meeting here on Monday.

Zafrul said the state had shown great potential in the industry, especially in the commitment to produce skilled workers for the sector. 

“Sarawak has previously made an announcement (commitment) to produce talents in universities [in Sarawak] focusing on the aerospace industry. 

“So, we think that there will be talents available, and in terms of geography, Sarawak’s location is excellent as it is close to Nusantara (Indonesia’s capital), near South Korea, Japan and even Australia,” he told reporters after the meeting.

The meeting was also attended by Sarawak Deputy Premier Datuk Amar Awang Tengah Ali Hassan, who is also the state’s international trade, industry and investment minister. 

Zafrul said the proposal to develop a new international airport in Kuching, as well as the establishment of a Sarawak-owned airline, could also help the development of the aerospace industry in Bumi Kenyalang. 

He said his ministry, via the Malaysian National Aerospace Industry Corporation (Naico Malaysia), will also work with Sarawak in achieving the development agenda for the industry. 

“We also see that the aerospace industry will be able to open up opportunities in the maintenance, repair and overhaul industry, as well as in terms of the manufacturing sector, because the aerospace industry requires companies to be involved in the manufacturing sector,” he said.

Previously, Sarawak Premier Tan Sri Abang Johari Tun Openg was reported to have said that Sarawak will open an aerospace training centre in preparation for a serious involvement in the aviation industry. 

Abang Johari said the training centre would be established in Tanjung Bako, Kuching, while theory classes would be held at the Sarawak Centre of Technological Excellence in Lundu. 

Source: Bernama

Govt proposes Sarawak as Malaysia’s aerospace hub

Malaysia needs to ship RM1.2 trillion worth of semiconductor exports by 2030 to maintain its position as the sixth largest exporter in the world.

Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai said that achieving such a significant increase will demand concerted efforts across various facets of the semiconductor value chain.

He highlighted that this goal represents a compound annual growth rate of about 7.6% from the current export value.

“To achieve this growth, Malaysia will need to focus on improving its capabilities across the semiconductor value chain, including advanced packaging, integrated circuit (IC) design, and smart manufacturing,” he said in a fireside chat at Tech in Asia Conference 2024 recently.

Wong stressed the necessity for collaboration between the government and the industry to tackle existing challenges, particularly talent shortage, attracting foreign investment and supporting the development of local semiconductor companies and ecosystems.

He said: “300,000 technical talents and engineers are needed in the sector, which the government and industry will need to work together to attract, train, and retain more local talent through initiatives like scholarships, cross-disciplinary training programmes, and collaborations with universities.”

The government, Wong said, needs to allow the strategy of using other countries’ talent in bridging the gap of the industry’s talent shortages. “The government should try to get all foreigners who study in Malaysia, especially in science and engineering, to continue working in Malaysia. This is under consideration and MSIA is hopeful to hear some positive news.”

He added that attracting foreign direct investment from multinational semiconductor companies is crucial for driving technology transfer and bolstering the local ecosystem. This may require offering competitive incentives and reducing barriers to entry to make Malaysia a more appealing destination for such investments.

Wong pointed out that the government’s National Semiconductor Strategy aims to nurture 10 Malaysian companies in advanced packaging and IC design.

“Providing funding, mentorship, and other support for local startups and small and medium enterprises will be essential in building a stronger indigenous semiconductor industry. Such measures are critical for fostering innovation and ensuring the industry’s sustainability.

“As for improving productivity and automation, upgrading manufacturing capabilities through smart automation and Industry 4.0 technologies will be key to enhancing productivity and competitiveness in the semiconductor industry.”

Adopting these advanced technologies will help streamline processes and reduce costs, making Malaysian semiconductor products more competitive on the global stage, Wong said.

“The government should continue to position Malaysia as an attractive alternative manufacturing hub for advanced semiconductor products. This strategic positioning is crucial as multinational companies seek to diversify their supply chains in response to global uncertainties.”

He expressed optimism about Malaysia’s potential to solidify its position as a leading semiconductor manufacturing hub. “With the right policies, investments, and collaborative efforts, Malaysia has the potential to achieve its ambitious growth targets for the industry,” Wong said.Malaysia needs to ship RM1.2 trillion worth of semiconductor exports by 2030 to maintain its position as the sixth largest exporter in the world.

Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai said that achieving such a significant increase will demand concerted efforts across various facets of the semiconductor value chain.

He highlighted that this goal represents a compound annual growth rate of about 7.6% from the current export value.

“To achieve this growth, Malaysia will need to focus on improving its capabilities across the semiconductor value chain, including advanced packaging, integrated circuit (IC) design, and smart manufacturing,” he said in a fireside chat at Tech in Asia Conference 2024 recently.

Wong stressed the necessity for collaboration between the government and the industry to tackle existing challenges, particularly talent shortage, attracting foreign investment and supporting the development of local semiconductor companies and ecosystems.

He said: “300,000 technical talents and engineers are needed in the sector, which the government and industry will need to work together to attract, train, and retain more local talent through initiatives like scholarships, cross-disciplinary training programmes, and collaborations with universities.”

The government, Wong said, needs to allow the strategy of using other countries’ talent in bridging the gap of the industry’s talent shortages. “The government should try to get all foreigners who study in Malaysia, especially in science and engineering, to continue working in Malaysia. This is under consideration and MSIA is hopeful to hear some positive news.”

He added that attracting foreign direct investment from multinational semiconductor companies is crucial for driving technology transfer and bolstering the local ecosystem. This may require offering competitive incentives and reducing barriers to entry to make Malaysia a more appealing destination for such investments.

Wong pointed out that the government’s National Semiconductor Strategy aims to nurture 10 Malaysian companies in advanced packaging and IC design.

“Providing funding, mentorship, and other support for local startups and small and medium enterprises will be essential in building a stronger indigenous semiconductor industry. Such measures are critical for fostering innovation and ensuring the industry’s sustainability.

“As for improving productivity and automation, upgrading manufacturing capabilities through smart automation and Industry 4.0 technologies will be key to enhancing productivity and competitiveness in the semiconductor industry.”

Adopting these advanced technologies will help streamline processes and reduce costs, making Malaysian semiconductor products more competitive on the global stage, Wong said.

“The government should continue to position Malaysia as an attractive alternative manufacturing hub for advanced semiconductor products. This strategic positioning is crucial as multinational companies seek to diversify their supply chains in response to global uncertainties.”

He expressed optimism about Malaysia’s potential to solidify its position as a leading semiconductor manufacturing hub. “With the right policies, investments, and collaborative efforts, Malaysia has the potential to achieve its ambitious growth targets for the industry,” Wong said.

Source: The Sun

MSIA president: Malaysia must enhance capabilities across semiconductor value chain

The Malaysian semiconductor industry could benefit from a second Donald Trump US presidency, according to Public Investment Bank Bhd (PublicInvest).

The research firm said that increased geopolitical tensions might drive more semiconductor companies to relocate to Malaysia, thanks to the country’s neutral position in the region and its strong semiconductor supply chain combined with cost advantages.

“To mitigate the potential risk of trade sanctions, we gather that more semiconductor customers plan to adopt the China + 1 and Taiwan + 1 policies by setting up a new footprint elsewhere.”

“Under the Trump government, we believe more restrictions will be imposed on US customers who source equipment from China, and also a steep rise in tariffs, which will make China’s imports more expensive,” it said.

PublicInvest said to address potential risks, US-China business partners might move their production lines and orders to a third country, which could benefit local players through increased orders and technology transfers from these multinational corporations (MNCs).

Additionally, the firm anticipated a renewed interest in local technology companies as valuations become more appealing, following a week of profit-taking in the sector.

“As we gather more positive guidance from respective management, we expect to see better financial performance in the second quarter, followed by strong momentum in the second half.”

“However, more volatility is also expected in tech stocks ahead of the US presidential election and the timing of interest rate cuts,” PublicInvest said.

Moreover, it mentioned that Nvidia’s release of its new Blackwell GPUs, combined with the rapid growth of large language models, is expected to transform nearly every industry and create new opportunities for local technology companies.

The firm continues to have an ‘Overweight’ rating on the technology sector, highlighting Inari Amertron Bhd, D&O Green Technologies Bhd, and QES Group Bhd as its top recommendations.

Source: NST

A Trump presidency could benefit Malaysian semicondcutor industry – analyst

Chery’s substantial investment of over RM1 billion in Malaysia signifies a bold departure from past strategies as it chooses to make a significant independent market entry, eschewing reliance on distributors.

The Chinese carmaker’s comeback effort to establish Malaysia as a pivotal Asean automotive hub for local and export markets could benefit notable automotive parts manufacturers such as Feytech Holdings Bhd and DRB-HICOM Bhd.

Affin Hwang Capital automotive analyst Afifah Ishak said Chery was targeting the right-hand drive of both the local and export markets including Singapore, Thailand, Brunei and Australia.

The plan kicks off with an estimated 500 units of Chery models for export in 2024, with the carmaker expecting a three-year compounded annual growth rate of 189 per cent to 12,000 units in 2027.

“We believe that Chery Malaysia’s position is solid, on the back of the recent establishment of its own CKD plant and the appointment of large dealers’ networks across each state in Malaysia,” said Afifah, who visited Chery’s first local CKD plant in Shah Alam recently.

The plant was developed at a cost of RM125 million which began operations in June this year, five months after construction commenced.

It includes a training centre, an R&D centre and the final assembly line for the Jaecoo J7 SUV which is assembled in two variants – the 2WD and AWD with prices ranging between RM138,000 and RM148,800.

The plant has an annual production capacity of 35,000 units and is currently operating at a 50 per cent utilisation rate.

Existing assembly plant in Kedah still producing

Chery’s existing assembly at the Inokom plant in Kulim, Kedah still continues, focusing on four of its SUV models – Omoda 5, Tiggo 8 Pro and the newly-launched Tiggo 7 Pro, and Omoda E5 electric vehicle.

“We understand that Chery plans to expand its capacity at the Inokom plant, to cater to the assembly of its newly-launched models. Nevertheless, we believe that the capacity expansion would take some time to materialise as Chery enters the Inokom plant without any equity stake.

“Hence, it is likely to have a lower priority compared to other auto players with equity ownership

in the plant, such as Sime Darby Bhd (51 per cent stake), Bermaz Auto Bhd (29 per cent stake),

Hyundai Motor Company (15 per cent stake) and Sime Darby Hyundai (5.0 per cent stake),” Afifah noted.

Currently, Chery’s annual production capacity at the Inokom plant stands at 6,000 units, which accounts for about 15 per cent of Inokom’s overall annual production capacity of 38,000 units.

Multi-brand strategy

Chery adopts a multi-brand strategy by introducing its sub-brands in Malaysia, said Afifah.

It began with the introduction of Omoda and Tiggo in July 2023, followed by the upcoming launch of Jaecoo in July this year.

Additionally, another sub-brand, Exceed, is expected to launch by 2027.

However, Jetour, despite being under the umbrella of Chery International, is expected to enter the Malaysian market in the second half of 2024 and operate as a distinct entity with its own separate management team, independent from Chery Malaysia.

“The multi-brand strategy is a common approach among Chinese automotive companies, typically executed through the creation of separate sub-brands or partnerships with third parties to develop new brands,” Afifah said.

Chery initially marked its first presence in Malaysia back in 2005 through Chery Alado as its authorised distributor, offering both CBU and CKD lineups.

The CKD models were locally assembled at Oriental Assemblers Sdn Bhd’s plant in Johor. However, Chery’s last operation in Malaysia was in 2017 which struggled with overall sales of only 137 units.

Leveraging Chery’s Asean ambition

Automotive parts suppliers are set to gain from Chery’s efforts to position Malaysia as an Asean automotive hub.

Afifah said Chery’s ongoing CKD assembly expansion for local and export markets has resulted in a noteworthy achievement of 57 per cent localisation of automotive parts through collaborations with 15 local vendors.

This surpasses the required 40 per cent under the National Automotive Policy 2020.

“We gather that key automotive parts suppliers such as Feytech Holdings, APM Automotive Holdings Bhd and DRB-HICOM are integral to Chery Malaysia’s supply chain,” she said.

Source: NST

Chery embarks on ambitious plan