Despite a weak start to its new financial year, UWC Bhd is optimistic about its business outlook amid signs of recovery in the semiconductor industry.

The technology-services provider is currently looking at expanding its capacity for front-end semiconductor manufacturing and electric vehicle (EV) projects, with the first phase of its new facility in Batu Kawan Industrial Park, Penang expected to be completed by the first quarter of 2024, Hong Leong Bank Investment Bank (HLIB) Research said.

In addition, the research house pointed out that UWC has completed construction of its new fabrication site in Kamunting, Perak and is buying other land.

“In the long run, the group intends to house all its fabrication activities in Taiping, while Penang sites focus on high-end assembly jobs,” HLIB Research said.

HLIB Research reiterated a “hold” call on UWC, with a lower target price of RM3.24, compared with RM3.27 previously, based on an unchanged price-to-earnings multiple of 34 times the estimated earnings for the financial year ending July 31, 2025 (FY25).

The revised target price reflects HLIB Research’s cut in its earnings forecast for UWC.

“At this juncture, we think the risk-reward is fair, despite the ongoing trade tensions that may eventually benefit UWC, which provides a one-stop solution as more companies shift production out of China to avoid import tariffs,” HLIB Research said.

The brokerage cut its earnings forecasts for UWC by 16% for FY24 and 1% for FY25.

In the first quarter ended Oct 31, 2023 (1QFY24), UWC’s net profit fell 85.1% to RM4.35mil from RM29.25mil in 1QFY23 on lower revenue. Consequently, its earnings per share declined to 0.4 sen from 2.66 sen previously.

During the period under review, the group’s revenue slid 50.7% to RM45.46mil from RM92.12mil in the corresponding period last year.

HLIB Research noted the results were below expectations, accounting for only 1% of its full-year and consensus forecasts. The deviation was due to lower-than-expected revenue and margins, it said.

“Turnover shrank due to the impact of macroeconomic headwinds, especially with a semiconductor-market cyclical downturn,” HLIB Research said.

“The uncertainty caused shifts in consumer behaviour that led to fluctuations in market demand for electronic products and technological devices, thus temporarily affecting the semiconductor sector’s performance,” the research house added.

In a filing to Bursa Malaysia, UWC, citing the latest forecast from World Semiconductor Trade Statistics, said the semiconductor market is expected to experience a robust recovery, with a growth of 13.1% in 2024.

Expansion in 2024 is anticipated across all categories and primarily driven by the memory sector, it added.

“The group continues to focus on commencing new projects, bringing on board new customers and strategising long-term growth plans to optimise potential business opportunities,” UWC said.

Source: The Star

UWC set to build on semiconductor recovery

THE pivot towards digitalisation has become a keystone for robust industrialisation, economic growth and competitiveness. Malaysia has embraced this paradigm shift in its pursuit of economic excellence, as encapsulated in the New Industrial Master Plan 2030 (NIMP 2030).

This plan, a forward-looking industrial policy for the Manufacturing and Manufacturing-Related Services sectors, spanning seven years until 2030, sets a strategic course for the nation’s industrial development, highlights the country’s position and direction, and underscores the government’s pivotal role in shaping the economy.

NIMP 2030 delineates cross-cutting strategies to elevate Malaysia’s economic complexity, drive towards a digitally vibrant nation, champion Net Zero objectives, and underpin economic security and inclusivity.

Its core ambition is to position Malaysia as a hub of competitive industry marked by high economic complexity, a high-income and skilled workforce, and robust domestic linkages.

The strategies laid out in NIMP 2030 are designed to hasten technology adoption, pivot away from a low-skilled labour model, foster technological innovation, and accelerate government digitalisation and integration.

It focuses on transforming Malaysia into a vibrant digital hub, a transformation crucial to driving innovation, boosting productivity, and unlocking new avenues for economic growth.

Particular emphasis is on the digitalisation of Small and Medium Enterprises (SMEs).

By encouraging SMEs to adopt automation and technology and nurturing a local tech solution provider ecosystem, NIMP 2030 seeks to enhance the ease of doing business, contributing to greater direct domestic investments (DDIs).

This strategy is crucial in a postpandemic world where digitalisation efforts present a competitive edge and a survival imperative.

LICENSED MANUFACTURING WAREHOUSE

A Licensed Manufacturing Warehouse (LMW), defined under Section 65A of the Customs Act 1967, is a premises licensed for warehousing and manufacturing approved products, primarily catering to export-oriented industries.

LMWs are directly controlled by the Customs Department through documentation and are subject to all its rules and regulations.

The facility enables Customs duty exemption to all raw materials and components used directly in the manufacturing process of approved produce from the initial manufacturing stage until the finished product is finally packed and ready for export. With this facility, LMW licensees can import duty-free raw materials, equipment, or spare parts, subjected to a given limit by tariff codes.

LMW companies can also undertake various approved activities within their premises, including value-added activity, re-manufacturing, and serving as International Procurement Centres (IPCs) or Regional Distribution Centres (RDCs).

Manufacturers must fulfil criteria such as owning a Manufacturing Licence under The Industrial Co-ordination Act 1975 (ICA), adhering to the manufacturing interpretation of Section 2 (1) of the Customs Act 1967, and exporting more than 80 per cent of the total value of finished goods over 12 months.

LMWs catalyse export-oriented industries, enabling them to operate efficiently while reducing the tax burden on imported materials. This facility streamlines manufacturing and promotes compliance with Customs regulations.

SMARTGPB EXPEDITES APPROVAL PROCESS

The SMARTGPB system for the LMW goods clearance approval process exemplifies the intersection of policy, industry, and digital adoption.

Digitisation enhances efficiency by streamlining the application and compliance processes in obtaining approval. It reduces bureaucratic hurdles and red tape, making it easier for businesses to focus on innovation and growth.

The SMARTGPB system epitomises the Customs Department’s dedication to facilitating efficient and effective trade and business processes for manufacturers.

The Special Taskforce to Facilitate Business or Pemudah meeting at the end of 2021 agreed to implement a regulatory experiment project to facilitate the movement of goods for companies with LMW status.

Malaysia Productivity Corporation (MPC) facilitated the regulatory experimental project, working with the Customs Department headquarters and its branch in Seberang Jaya, Pulau Pinang, and the Malaysian Semiconductor Industry Association (MSIA).

SMARTGPB: IMPACTS

The first phase of SMARTGPB implementation started in Penang in April last year. Until December, the Customs Department processed 1,620 applications, and 517 LMW companies in Penang registered through the system.

The system is expected to reach nationwide implementation in 2024 and by the end of December 2024, all LMW companies must obtain approvals through the system. The proliferation of the SMARTGPB system is expected to benefit more than 2,000 LMW status companies.

SMARTGPB reduces approval time for low-risk applications from three days to only one minute and medium to high-risk applications to 45 minutes processing time per application.

Within this regulatory experimentation period, the Customs Department processed 696 low-risk applications for immediate approval and 924 medium to high-risk applications requiring review and approval from the Officerin-Charge.

The expansion of SMARTGPB in Malaysia is projected to reduce RM139 million in compliance cost annually . Moving towards the green economy, this improvement is expected to reduce paper consumption by at least 12 million A4 paper annually.

Source: NST

Digitalisation boosts manufacturing productivity

Country on track to earn RM1.5 trillion, become green nation with low carbon emissions via clean burning fuel: Ministry

The Malaysian economy is set for greater prosperity come 2050, with the Hydrogen Economy and Technology Roadmap (HETR) enabling the contribution of about RM1.5 trillion to the GDP and creating 200,000 new jobs, said Science, Technology and Innovation Ministry SecretaryGeneral Datuk Dr Aminuddin Hassim.

He told theSun that Malaysia is already on track to become a green nation with low carbon emissions, thanks to the recently launched HETR.

“Hydrogen is a clean-burning fuel that produces heat and electricity with only water vapour as a by-product. The HETR ties into the National Energy Policy 2022-2040 and National Energy Transition Roadmap.

“These policies lay the foundation for Malaysia to achieve net-zero greenhouse gas (GHG) emissions by 2050. Even before this, and by 2030, the country would have a GDP contribution of RM60 billion.”

He said hydrogen could be made with renewable resources such as solar, wind and hydropower, which Malaysia is rich in.

“Malaysia’s strategic landscape enables us to produce high amounts of renewable electricity. This makes it suitable for producing hydrogen.

“In Sabah and Sarawak, hydropower is abundant but in Peninsular Malaysia, solar photovoltaic and ocean energy such as wave and tidal energy could be used to generate it. The renewable electricity is used to power the process that produces hydrogen.”

Aminuddin said Sarawak has taken the lead in implementing hydrogen-powered public transit and refuelling infrastructure in East Malaysia, by using the abundance of hydropower available to generate
hydrogen.

“Many of Sarawak’s local organisations, for instance Sarawak Economic Development Corporation (SEDC) Energy, are generating and using hydrogen.

“SEDC Energy has signed agreements with other local organisations to accelerate the adoption of electrolysers, which use electricity to generate hydrogen.

“It is currently planning to invest in a manufacturing plant and aims to mass produce electrolysers by 2024.”

He said it has also opened a multi-fuel station in Kuching, which supplies hydrogen at the pump for hydrogen fuel cell-powered vehicles.

Aminuddin added that Petronas via Petronas Technology Ventures Sdn Bhd, NanoMalaysia Berhad, UMW Berhad as well as Malaysian Green Technology and Climate Change Corporation are collaborating to establish and operate the first mobile green hydrogen refuelling station in Peninsular Malaysia.

“This collaboration aims to increase hydrogen fuel cell vehicle usage and identify other fiscal and non-fiscal incentives to promote hydrogen vehicles in Malaysia, especially for heavy-duty and long-range use.”

He said Tenaga Nasional Berhad (TNB) and Petronas are working together to build a green hydrogen ecosystem.

He added that it would include the supply of green electricity, electrolysers, hydrogen compression, storage and transport.

“TNB is exploring co-firing natural gas with green hydrogen for cleaner power generation in a repowered project at the Sultan Ismail Power Station in Paka, Terengganu. It is expected to be commissioned by 2030.”

Aminuddin said there are also several other projects under way, which involve NanoMalaysia Berhad, a delivery agency under the Science, Technology and Innovation Ministry.

“These projects include the conversion of buses to enable them to use hydrogen as a zero-emission range extender. These projects are expected to be completed between 2024 and 2025.”

Aminuddin said there are many opportunities that Malaysia could explore in hydrogen production, and that the country’s current hydrogen efforts cover the entire supply and value chain.

“We can achieve the goal of netzero GHG emissions by 2050 and also produce hydrogen and even equipment and technology for export to other countries.

“Malaysia can lead the development of new hydrogen technologies along the value chain, such as in solid-state based technology.”

Malaysia can also anticipate excellent economic growth as the hydrogen industry can bring significant economic value to the country.

Source: The Sun

Hydrogen technology to boost GDP by 2050

The Chuping Valley Industrial Area (CVIA) Stakeholders Day Programme held today has provided a platform for investors to engage with relevant authorities and gives investors opportunities to get information regarding the projects and view the plots and sites offered by the CVIA.

In a statement, the Perlis state government said that investors were also briefed on relevant information, requirements and incentives offered for investments at the CVIA by representatives from the state government, Northern Corridor Implementation Authority (NCIA) and Malaysian Investment Development Authority (MIDA).

It said this programme brought together investment agencies and 150 potential investors, particularly in its targeted clusters such as renewable energy, green manufacturing and halal industry.

“The CVIA Stakeholders Day was a collective collaboration between the state government and NCIA to promote CVIA and strengthen the state’s agenda to attract new investment in Perlis,” it said.

Perlis State Secretary Datuk Muhd Khair Razman Mohamed Annuar said CVIA was conceptualised to support Malaysia’s sustainable development and environmental agenda through viable projects with technology as the key enabler.

“Strategically located bordering Thailand and being a member of Indonesia – Malaysia – Thailand Growth Triangle (IMT-GT), CVIA is an attractive place for investors to set up companies and will complement and maximise its potentials and opportunity arising from surrounding development, especially to Perlis Inland Port (PIP).

“As a commitment, the Perlis state government, NCIA and MIDA will strive to provide full support and give their commitment to assist through various processes and incentives for investors interested in investing in CVIA,” he said.

CVIA is located in northeast Perlis and borders southern Thailand.

This new industrial area is set to transform Perlis into a high-income and industrialised state by 2030, and it is expected to contribute over RM2.5 billion towards Malaysia’s Gross National Income (GNI), as well as attract a total of RM4.5 billion in private investments and create over 12,000 jobs by 2030.

Last week, on Dec 12, Perlis Menteri Besar Mohd Shukri Ramli said the state government had approved six companies to carry out development in the CVIA, with an estimated investment value of RM2.91 billion, as of last month, and the first plant is expected to start operating in the third quarter of 2024.

Source: Bernama

Perlis holds CVIA stakeholders day for investors to engage with authorities

A growing number of Chinese semiconductor design companies are tapping Malaysian firms to assemble a portion of their high-end chips, keen to hedge risks in case the US expands sanctions on China’s chip industry, sources say.

The companies are asking Malaysian chip packaging firms to assemble a type of chip known as graphics processing units (GPUs), according to three people with knowledge of the discussions.

The requests only encompass assembly – which does not contravene any US restrictions – and not fabrication of the chip wafers, they said.

Some contracts have already been agreed, two of the people added.

The people declined to disclose the names of the companies involved or to be identified, citing confidentiality agreements.

Seeking to limit China’s access to high-end GPUs that could fuel artificial intelligence (AI) breakthroughs or power supercomputers and military applications, Washington has increasingly placed restrictions on their sales as well as on sophisticated chip-making equipment.

As those sanctions bite and an AI boom fuels demand, smaller Chinese semiconductor design firms are struggling to secure sufficient Advanced Packaging services at home, analysts have said.

Some of the Chinese companies are interested in advanced chip packaging services, two people said.

Advanced packaging of chips can significantly improve chip performance and is emerging as a critical technology in the semiconductor industry.

This sometimes involves the construction of chiplets where chips are packaged tightly to work together as one powerful brain.

Although not subject to US export restrictions, it’s an area that can require sophisticated technology which the firms worry might one day be targeted for curbs on exports to China, the two people added.

Malaysia, a major hub in the semiconductor supply chain, is seen as well placed to grab further business as Chinese chip firms diversify outside of China for assembling needs.

Unisem, majority owned by China’s Huatian Technology, and other Malaysian chip packaging companies have seen increased business and inquiries from Chinese clients, said one source who was briefed on the matter.

Unisem chairman John Chia declined to comment on the company’s clients but said: “Due to trade sanctions and supply chain issues, many Chinese chip design houses have come to Malaysia to establish additional sources of supply outside of China to support their business in and out of China.”

Chinese chip design firms also see Malaysia as a good option because the country is perceived as being on good terms with China, is affordable, with an experienced workforce and sophisticated equipment, two of the sources said.

Asked whether accepting orders to assemble GPUs from Chinese firms could potentially provoke US ire, Chia said Unisem’s business dealings were “fully legitimate and compliant” and the company did not have the time to worry over “too many possibilities”.

He noted that most of Unisem’s customers in Malaysia were from the United States.

The US Department of Commerce did not respond to requests for comment.

Other big chip packaging firms in the country include Malaysian Pacific Industries and Inari Amertron.

They did not respond to Reuters requests for comment.

Chinese companies are also interested in having their chips assembled outside China as that could also make it easier to sell their products in non-Chinese markets, said one source, an investor in two Chinese chip startups.

Malaysia currently accounts for 13% of the global market for semiconductor packaging, assembly, and testing and is aiming to boost that to 15% by 2030.

Chinese chip firms that have announced plans to expand in Malaysia include Xfusion, a former Huawei unit.

It said in September it would partner with Malaysia’s NationGate to manufacture GPU servers – servers designed for data centres and which are used in AI and high-performance computing.

Shanghai-based StarFive is also building a design centre in Penang, and chip packaging and testing firm TongFu Microelectronics said last year it would expand its Malaysia facility – a venture with US chipmaker AMD.

Offering an array of incentives, Malaysia has attracted multi-billion dollar chip investments.

Germany’s Infineon said in August it would invest US$5.4bil to expand its power chip plant there.

US chipmaker Intel announced in 2021 that it would build a US$7bil advanced chip packaging plant in Malaysia.

Chinese companies are not just choosing Malaysia. In 2021, JCET Group, the world’s third-largest chip assembly and testing company, completed an acquisition of an advanced testing facility in Singapore.

Other countries such as Vietnam and India are also seeking to expand further into chip manufacturing services.

The two countries are hoping to lure clients keen to minimise US-Sino geopolitical risks.

Source: The Star/Reuters

Chinese firms look for assembly of high-end chips

APB Resources Bhd, a fabricator of design engineering equipment, plans to acquire 70 million shares or 10.41 per cent stake in Globetronics Technology Bhd, an electronic manufacturing services and semiconductor company, for RM140 million.

In a filing with Bursa Malaysia today, the group said the share sale deal was inked with General Produce Agency Sdn Bhd and Ng Kweng Chong Holdings Sdn Bhd to purchase their respective 6.89 per cent and 3.52 per cent stakes in Globetronics.

“The proposed acquisition will result in a diversion of more than 25 per cent of APB’s net asset and its subsidiaries into the Globetronics investment.

“APB will be seeking the approval of its shareholders at an extraordinary general meeting to be convened for the proposed diversification under paragraph 10.13 of the Main Market Listing Requirements of Bursa Malaysia Securities Bhd,” it said.

APB said it intends to appoint a corporate representative to the board of Globetronics, further solidifying the group’s commitment and partnership.

“APB expects to engage in equity accounting for this investment as an associate company, following a review with the group’s auditors.

“This approach will allow APB to recognise a share of Globetronics’ profits, in line with the 10.41 per cent equity interest,” it said.

APB added that the strategic acquisition is anticipated to boost the group’s earnings and create an additional income stream.

Source: Bernama

APB plans to diversify into semiconductor industry with RM140 mln Globetronics equity acquisition

MALAYSIA is seeing exponential growth in electric vehicle (EV) sales and the positive momentum will likely continue until year end.

Malaysia has more than 100,000 registered EVs to date, said Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

“More than 12,000 battery electric vehicles (BEVs) have been registered since 2011, with the number registered this year surpassing 9,000 units,” he said at the soft launch of the Malaysia Autoshow 2024 (MAS 2024).

For the first 10 months of the year, Malaysia’s vehicle sales registered a strong growth, up 11.6 per cent year-on-year to almost 647,000 units.

Tengku Zafrul said he believed that EVs would be the catalyst for the growth of Malaysia’s manufacturing exports.

He added that the electrical and electronics (E&E) products, a major supply chain in the EV sector, contributed to 40 per cent of Malaysia’s exports from the manufacturing sector.

“Hence, there is a lot of potential in new-generation vehicles. For example, a hybrid car will have around 1,500 chips.

“As for EVs, they may need at least 3,000 chips per car and these come from the E&E sector.”

Malaysia remains an attractive destination for EV investors. Between 2018 and June this year, the Malaysian Investment Development Authority approved 59 projects worth RM26.2 billion in the EV sector and its related ecosystems, encompassing vehicle assembly, manufacturing parts and charging components.

Meanwhile, Tengku Zafrul said to accelerate the National Energy Transition Roadmap that was launched in August, his ministry was targeting to have 20 per cent of the country’s annual new car sales to consist of electrified vehicles by 2030, 50 per cent by 2040 and 80 per cent by 2050.

“The National Automotive Policy will provide the automotive industry with a clear direction,” he added. 

Source: Bernama

Malaysia seeing exponential growth in EV sales, says Zafrul

AS China falls into deeper debt amid its slowing growth momentum, India has risen to be the poster boy of economic growth among the developing countries.

India has already overtaken China as the world’s most populous country this year, and with a population of over 1.4 billion people, the South Asian country looks to replace China as the world’s factory.

Led by Prime Minister Narendra Modi, who secured a resounding win in the recent state polls, India is stepping up its game to woo foreign companies that are moving out of China.

The country, which has the second-largest English speaking population, is now manufacturing Apple Inc’s latest iphone 15. In 2022, Apple tripled its iphone production in India.

Tesla, for example, is inching closer to building its electric car factory in India potentially in 2024, if the Indian government agrees to massively slash its hefty import duties.

This year alone, Google and Amazon announced their plans to increase long-term investments in India, especially in the areas of artificial intelligence, cloud computing and financial technology.

It was recently reported that the value of announced US and European greenfield investment into India shot up by some Us$65bil or 400% between 2021 and 2022.

On the contrary, investments into China dropped to below Us$20bil in 2022, from a peak of Us$120bil in 2018.

India still has a long way to overtake China economically, but the Indian government has been ramping up infrastructure developments and making headway in exploring new areas of growth.

This includes creating a global semiconductor hub in the country.

Memory chip maker Micron Technology Inc has commenced the building of a semiconductor assembly and test plant in Gujarat, which is the first of its kind in India.

The Us$2.75bil plant, which is part of Modi’s “India Semiconductor Mission” agenda, will see the first made-in-india chip by end-2024.

Malaysia stands to benefit from India’s pivot to semiconductors. Earlier in August 2023, High Commissioner of India to Malaysia B.N. Reddy said the country would like to potentially partner with Malaysian semiconductor players

Given Malaysia’s long-built expertise in the outsourced semiconductor assembly and testing segment, both India and Malaysia could forge greater economic and trade opportunities moving forward.

Source: The Star

India’s rise set to benefit M’sian chip players

PERUSAHAAN Otomobil Kedua Sdn Bhd (Perodua) is eyeing electric and hybrid vehicles to account for up to 20 per cent of its new car sales by 2030.

President and chief executive officer Datuk Seri Zainal Abidin Ahmad said this was possible “if all industry players can work together”.

“We are working together with the government and other partners. We have been appointed in the new industrial plan to spearhead the electric vehicle (EV) development in Malaysia,” he said after witnessing a memorandum of collaboration (MoC) signing ceremony at the Malaysia Tourism Centre recently.

“We need to come up with a new product. We have not finalised the production timing but the target given by the government — 30 per cent by 2025 or 2030 — will materialise if all the parties cooperate,” he said.

He said the overall EV ecosystem involved a huge investment and he hoped other companies would be able to help achieve the government’s target, one of which was the installation of 10,000 charging stations nationwide.

On Nov 22, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the government was diligently building the necessary infrastructure as part of its target to have EVs and hybrids account for 20 per cent of new car sales by 2030; 50 per cent by 2040 and 80 per cent by 2050.

PROMOTING TOURISM

Earlier, Tourism Malaysia and Perodua inked a three-year MoC that runs from 2024 to 2026.

The foundation of the partnership is built on the mutual commitment towards advancing Malaysia’s tourism sector, facilitating accessibility and enhancing the overall tourist experience.

“We are thrilled to embark on this transformative journey with Perodua. Our collaboration signifies a united commitment to making Malaysia even more attractive to tourists,” said Tourism Malaysia director-general Datuk Dr Ammar Ghapar.

He said the tourism industry was not just a crucial component of the economy but also a reflection of the beauty, diversity, and cultural heritage of the nation.

“Tourism is not merely about numbers and revenue; it is about creating unforgettable experiences and cherished memories for our visitors while showcasing the wonders of our beloved country.

“We are joining hands with a shared vision and a common goal which is to take our nation’s tourism sector to new heights.

“By combining the strengths and resources of Perodua and Tourism Malaysia, we are not only aiming to increase the number of tourists but also their overall satisfaction. We want every visitor to leave Malaysia with a profound sense of wonder and a desire to return,” he added.

Key objectives to be tackled under the partnership agreement included enhancing accessibility, sustainable tourism, cultural exchange, digital marketing and customer experience.

Perodua will play a pivotal role in improving transportation infrastructure and making it easier for tourists to explore the country’s diverse landscapes.

Alongside Tourism Malaysia, the two will work together to develop and promote road trips and scenic drives, encouraging visitors to explore Malaysia at their own pace.

In an era where sustainability is paramount, the collaboration will also emphasise on responsible and sustainable tourism practices. This will be done by encouraging eco-friendly travel and by promoting awareness of preserving Malaysia’s natural heritage, while ensuring that future generations can also enjoy the beauty of Malaysia.

Digital marketing strategies will be heavily deployed to reach a broader audience.

Leveraging Perodua’s digital expertise, this will include creating engaging content and utilising social media and other online platforms to promote the country.

Lastly, both organisations will work closely together to enhance the overall tourist experience. From transportation services to recommendations for cultural events and attractions, the aim is for tourists to have a seamless and memorable visit to Malaysia.

“This collaboration and its objectives are in line with Perodua’s ‘mobility as a lifestyle’ initiative,” said Zainal.

Zainal during the event explained that through this MoC, Perodua would be able to expand its new business model, specifically vehicle subscription, while at the same time get real-time feedback from foreign travellers on their opinion of Perodua.

He added that Perodua would b

e able to expand its new business model, specifically vehicle subscription and simultaneously get real-time feedback from foreign travellers on the carmaker via the collaboration.

Source: Bernama

Perodua sets EV, hybrid sales target

A growing number of Chinese semiconductor design companies are tapping Malaysian firms to assemble a portion of their high-end chips, keen to hedge risks in case the US expands sanctions on China’s chip industry, sources said.

The companies are asking Malaysian chip packaging firms to assemble a type of chip known as graphics processing units (GPUs), according to three people with knowledge of the discussions.

The requests only encompass assembly — which does not contravene any US restrictions — and not fabrication of the chip wafers, they said. Some contracts have already been agreed, two of the people added.

The people declined to disclose the names of the companies involved or to be identified, citing confidentiality agreements.

Seeking to limit China’s access to high-end GPUs that could fuel artificial intelligence breakthroughs or power supercomputers and military applications, Washington has increasingly placed restrictions on their sales as well as on sophisticated chip-making equipment.

As those sanctions bite and an AI boom fuels demand, smaller Chinese semiconductor design firms are struggling to secure sufficient advanced packaging services at home, analysts have said.

Some of the Chinese companies are interested in advanced chip packaging services, two people said.

Advanced packaging of chips can significantly improve chip performance and is emerging as a critical technology in the semiconductor industry. This sometimes involves the construction of chiplets where chips are packaged tightly to work together as one powerful brain.

Although not subject to US export restrictions, it’s an area that can require sophisticated technology which the firms worry might one day be targeted for curbs on exports to China, the two people added.

Malaysia, a major hub in the semiconductor supply chain, is seen as well placed to grab further business as Chinese chip firms diversify outside of China for assembling needs.

Unisem, majority owned by China’s Huatian Technology, and other Malaysian chip packaging companies have seen increased business and inquiries from Chinese clients, said one source who was briefed on the matter.

Unisem chairman John Chia declined to comment on the company’s clients but said: “Due to trade sanctions and supply chain issues, many Chinese chip design houses have come to Malaysia to establish additional sources of supply outside of China to support their business in and out of China.”

Chinese chip design firms also see Malaysia as a good option because the country is perceived as being on good terms with China, is affordable, with an experienced workforce and sophisticated equipment, two of the sources said.

Asked whether accepting orders to assemble GPUs from Chinese firms could potentially provoke US ire, Chia said Unisem’s business dealings were “fully legitimate and compliant” and the company did not have the time to worry over “too many possibilities”.

He noted that most of Unisem’s customers in Malaysia were from the US.

The US Department of Commerce did not respond to requests for comment.

Other big chip packaging firms in the country include Malaysian Pacific Industries and Inari Amertron. They did not respond to Reuters requests for comment.

Chinese companies are also interested in having their chips assembled outside China as that could also make it easier to sell their products in non-Chinese markets, said one source, an investor in two Chinese chip startups.

A major hub

Malaysia currently accounts for 13% of the global market for semiconductor packaging, assembly, and testing and is aiming to boost that to 15% by 2030.

Chinese chip firms that have announced plans to expand in Malaysia include Xfusion, a former Huawei unit, which said in September it would partner with Malaysia’s NationGate to manufacture GPU servers — servers designed for data centres and which are used in AI and high-performance computing.

Shanghai-based StarFive is also building a design centre in Penang, and chip packaging and testing firm TongFu Microelectronics said last year it would expand its Malaysia facility — a venture with US chipmaker AMD.

Offering an array of incentives, Malaysia has attracted multi-billion dollar chip investments. Germany’s Infineon said in August it would invest €5 billion (RM25.2 billion) to expand its power chip plant there.

US chipmaker Intel announced in 2021 that it would build a US$7 billion advanced chip packaging plant in Malaysia.

Chinese companies are not just choosing Malaysia. In 2021, JCET Group, the world’s third-largest chip assembly and testing company, completed an acquisition of an advanced testing facility in Singapore.

Other countries such as Vietnam and India are also seeking to expand further into chip manufacturing services, hoping to lure clients keen to minimise U.S.-Sino geopolitical risks.

Source: The Edge Malaysia

Chinese firms look to Malaysia for assembly of high-end chips, sources say