CORPORATE ll·CElxiEMALAHlAOCTOBER 5, 2020 S1 COVER STORY normal as the has changed cnstlcaly. Meanwhle, the htensltled US-chinatrade war and the great demupllngbetween the two superpowershave madethe business environmenteven more complex.It Is llke sallng In rough seas on a stormy night. Last month, The Edge took a b1p up north In search of bright spots In the current trying Umes. We met with the captains of the electrlcal and electronics(E&E) and the medical devices Industries. The picture they presented Is not all that gloomy. The Movement Control Order, It seems. Is just a hiccup. In fact. these companies (0 are benefitingfrom trade diversion � and are hiring Instead of firing, and .J,.... (0 expanding, not downsizing, llke s: many others have been forced to do. BY LIEW IIA TENG 2019 demand by end-use & The mature ecosystem that has "'CT been developed since the 1970s has s its name implies, a semicon­ (0 attractedan Increasing number of ductor chip is made of a mate­ O> CT multlnaUonal corporaUons to set up rial that conducts current, but g_ their regional producUon bases In not completely.The conductivity "' Communication Computer Consumer AutomotiveB Industrial Government� Penang. of a semiconductor lies some­ □ ----- ----- --- ---- ----- - We travelled to Bayan Lepas where between that of an insu­ - - - -- - ::\' -10.5 -18.7 -5.2 -6.9 -13.0 13.0 " and the Batu Kawan Industrial Park, lator, which has almost no con­ 0"' ductivity,and conductor,which has almost ----- --------- ----------- "' where most of these companies are a - - -'? located, during the fOU'-claytrip. full conductivity. A 136.0 117_3 54.7 50.2 48.9 5.2 '? In the E&E sector,spoke we In the years to come,Malaysian semicon­ 0 to Vl1roxCorp Bhd founder and ductor and semiconductor-related companies, SEMICONDUCTOI.lh'OlJSn.Y ASSOCIATION � president Chu Jenn Weng, Greatech also known as electricaland electronics(E&E) Fewer semiconductor firms Technology Bhd executive director or technology firms,will have to re-strate­ Asia projected to capture nearly i and CEO Tan Eng Kee, FoundPac gise carefully amid the intensifiedtech cold manufacturing at leading edge all manufacturing growth � ln2001.ne.Tly30 semiconductorfirmsmanufactu-e-d 2019-2030 IMtanedGobalWafer Capac ty Projection Group Bhd CEO Ong Choon Heng war, which is central to the bigger US-China leadi"lg-edge chips. As timehas progressedand leading-edge l i g and Oppstar TechnologySdn Bhd trade war. semiconductorsh.;n,e become more diffiwltand costty to 83¾ managing director Ng Meng Thal. Llke it or not,semiconductors arenow at the prodx:e. that rumbef has decreased significantly.The rerrniiring dipcomp;:miesrTon1.J/acturingatth c le�g-edge..-efrom lnAsla In the meclcal devices sector, core of the technology cold war,and Malaysian only threecountrie<i:T �Nl Korea and� UnitedSt.1tes. 82¾ we E&E players may have to strike a finebalance met Boston Scientificvice­ In Asia president and general manager between the two superpowers- much like " of manufacturing and distribution the function of, well, semiconductors. for Malaysia Dave Mitchel� Allen For those who do not already know, theUS In Asia Healthcare Products (M) Sdn andChina are forging their own semiconduc­ Bhd managing director Michael tor supply chains.The Chineseintend to move Hng. Straits Orthopaedics Sdn up the value chain by designing and making Bhd CEO Su TH, as well as the their own chips at the front end, whereas the mn AssodaUon of Malayslan Medical Americans intend to move down the value '1 ' ' ' ·01 •03 ·os ·01 •og ·11 4 '18 =[-19 25 30 Industries executive director chain by making chips on us soil. SJ:MICOHPUC"roaINDllSTIIY ASSOCIAT ION • dalil UIUw;il;:iblel o,.Ytd!S Ching Choon Slong. B Braun's Asia The protectionismand renationalisation Pacific president Lam Chee Hong wave in the tech sector has created not just tre­ and Taiwan, has increased significantly. China are protective of their own interests contributed via written responses mendous opportunitiesfor the rest of the world, "China has been aggressively betting on at the expense of freetrade,the global econo­ aswel. but also some complications and challenges. the future of the semiconductor industry. my could suffer.hewarns. "To me,anywar is lnvestPenang CEO Oatuk Globalisation is likely to be a thing of the The country has invested heavily to manage not good for the world. when the elephants Loo Lee Lian, In a candid virtual past, whereas regionalisation or localisation its short-term challenges as well as prepare are fighting,it is the grass that suffersmost. Interview, shared with us Penang's could be the future. its long-term plans.Huawei (Technologies The world will be divided. There will besome robust first-quarter foreign direct Players in the semiconductor industry, Co Ltd) has been stockpiling for up to two casualties. We only have one planet, so we Investment numbers and the from upstream to downstream, will have years.and this has triggered a lot of growth should try to make it a better place." obstacles that may hinder the to go through a painful reconfigurationof and demand for the semiconductor indus­ For instance,Chu says,if china moves up state and naUon's efforts to stay complicated business relationships with try," Chu tells The Edge. the value chain and produces its own chips, competlUve as a destlnaUon for FOi. their suppliers, partners and customers At the same time,American companies American chip players may also sufferbecause In the next few weeks, we wUI from various countries. are moving out from China and increas­ most of their orders come from China. feature a series of articlesto clscuss ViTrox corp Bhd founder and president ing their capacity elsewhere. such a mega He concedes that another downside of the the chaRenges and opportunities Chu Jenn Weng acknowledges that in the trendhas raised the demand for technology trade war is that Malaysian companies may these Penang-based companies short term,he sees more positives than neg­ equipment, benefittingMalaysian compa­ have to choose between the US and China. face. atives fromthe trade war. He says semicon­ nies such as ViTrox. "We need to find ways to retain our business. ductor demand fromAsia,especially China But in the long run, when the US and CONTINUES ON PAGE 52 CORPORATE S2 Tl CElxiE MALAYSIA OCTOBER 5. 2010 COVER STORY LIEW JIA TENG Semiconductorvalue chain lnarl Amertron BY Malaysian Pacific Industries V.S. Industry o understand the role Malaysian Unlsem SKP Resources semiconductor and electrical and Oppstar Technology Globetronics Technology ATAIMS electronics (E&E) firmsplay in the T SilTerra Malaysia KESM Industries K-One Technology semiconductor value chain, one has lnflnecs Systems to understand the manufacturing process (see chart). It all begins with the design of the integrated ELECTRONICS• circuit(IC} -a set of el ectronic circuitsconsisting MANUFACTURING of miniaturised electronic components built into SERVICE (EMS) electricalnetworks. The ICs, also known as chips, are createdon a flat piece of wafer made of pure semiconductor material, normally silicon This process is called wafer fabrication. Subsequently, the chips go through a packaging process and are moulded into the Sub-value chain/ Supportingactivities appropriate design and form. Wafers are cut IntoTo Individual chips and the functional ones are welded onto a printed circuit board. determine whether these packaged semiconductor devices work properly, they Where are are put through testingprocedures, induding PE vision inspection, an electrical functionaltest TE and a burn-in test. Malaysian This is where semiconductor automated test equipment (ATE) comes into the picture. ATE systems are designed to not only reduce players in the the amount of test time needed to verify that a particularsemiconductor device works, but also to prevent defective ones from reaching se111iconductor the end-user. In fact, ATE is needed not just for back-end JF Technology VITrox Corp semiconductor testing. but also for front-end FoundPac Group wafer testing. value chain? Pentamaster Corp Lastly, the final consumer products are Greatech Technology produced by electronics manufacturing service Ml Technovatlon (EMS) providers, which are mostly contract Aemulus Holdings manufacturers. To be more precise, Greatech and computers, mobile phones, art ficial intelligence, i El soft Research For perspective, local semiconductor and Pentamaster are factory automation solution the Internet of Things and the automotive semiconductor-related firms, especiallythe specialists whoseclients Include MN Cs from Industry. MMS Ventures public-listed ones, are mostly involved in the the semiconductor sector. SilTerra Malaysia Sdn Bhd - owned by VisDynamics Holdings mid- to lower-end of the value chain, serving The third group comprises the likes of sovereign wealth fund Khazanah Nasional Bhd foreignsemiconductor manufacturers, brand JF Technology Bhd and FoundPac Group - is one of the few semiconductor wafer pure­ little owners, IC developers and fabricators. Bhd, which design and manufacture high­ play foundries in the country. It specialises between transistors on a chip. The smaller the They can be divided into three groups. The performance test sockets as well as other In the productionof semiconductor wafers number, the more cutting-edgethe chips are, and first comprises outsourced semiconductor materials such as stiffeners forOsat th.Jtcan be as as 90 nanometres. The thus more challenging and expensive to develop. assembly and test (Osat) companies such as companies and semiconductor firms. smaller the number of nanometres-a unit of Intel co-founder Gordon Moore predicted lnari AmertronBhd, Malaysian PacificIndustries And then, there are the likes of V.S. Industry measurement that is one-billionth of a metre in the 1960s that ttienumber of transistors Bhd (MPI), Unisem (M) Bhd, Globetronics Bhd, SKP Resources Bhd. ATA IMS Bhd and - the better it is. Huawei's latest smartphone is on a ct-opwould double every year - Moore's Technology Bhd and KESM IndustriesBhd. K-One Technology Bhd, whose businesses using a 5-nanometre chip.