Phillip Capital Research says industrial players in the electronics manufacturing services (EMS) and technology sectors are better positioned than consumer electronics players to ride on the artificial intelligence (AI) boom.

The research house said in a report that industrial players in the EMS and tech sectors are also less susceptible to any global economic slowdown.

“In the technology sector, the market has already priced in the impact of significant foreign exchange losses ahead of the results for the third quarter of 2024. However, sentiment is improving as the worst seems to be over and the US dollar strengthens.

“Investors are positioning for the next semiconductor cycle, with earnings delivery being the key catalyst for further share price re-ratings. The focus is expected to remain on the AI supply chain.

“We maintain an ‘overweight’ stance, favouring long-term secular trends in data centres, automotive and solar, with a preference for front-end exposures,” the research house said.

The research house said the EMS sector offered a higher degree of earnings certainty, with Nationgate Holdings Bhd set to ramp up server production and fulfil delivery orders, driving 83% year-on-year (y-o-y) earnings per share growth in 2025.

Phillip Capital Research said the technology sector appeared to have bottomed out, signalling a gradual recovery in earnings.

“We foresee stronger earnings momentum in 2025, with sector earnings growth of 69.5% y-o-y as the semiconductor cycle turns,” the research house said.

For EMS sector exposure, the research house’s top pick is Nationgate, as it continued to benefit from rising demand for AI servers.

“We raise our target price to RM3 from RM2.65 after factoring in higher server deliveries. We also continue to like Frontken Corp Bhd due to its unique exposure to the front-end semiconductor value chain.

“We also raise our earnings and target price for Pentamaster Corp Bhd from RM4.40, on an unchanged 31 times price-earnings multiple, taking into account the increased stake in Penta International from 63.9% to 71%.

Source: The Star

Electronics, tech players to continue riding AI wave

VentureTECH Sdn Bhd and MTC Orec Sdn Bhd have formed strategic partnerships to accelerate the development of MTC Orec’s biomethane plants, reinforcing both companies’ commitment to sustainable growth and renewable energy innovation.

In a joint statement issued on Monday, the companies revealed that VentureTECH’s investment will support the establishment of new biomethane plants in Peninsular Malaysia’s northern and east coast regions.

The investment will also enable the execution of a biomethane project in partnership with a leading oil and gas player, set to commence next year.

These efforts are expected to make a significant contribution to Malaysia’s renewable energy goals, drive sustainable growth, and strengthen the nation’s commitment to reducing carbon emissions, according to the statement.

VentureTECH chief executive officer Ahmad Redzuan Sidek said the investment reflects the company’s dedication to supporting forward-thinking businesses that promote both economic growth and environmental sustainability.

“MTC Orec’s expertise in bioenergy and its contributions to Malaysia’s renewable energy targets make it an ideal partner.

“This collaboration will not only reduce carbon emissions and promote renewable energy adoption, but also create opportunities for Bumiputera companies and local communities. Together, we are paving the way for a more sustainable and inclusive energy landscape,” said Ahmad Redzuan.

He further noted that the partnership will foster the creation of high-value jobs and nurture engineering expertise, particularly in rural and underserved areas.

“MTC Orec’s innovative projects align with Malaysia’s aspirations for sustainable and inclusive growth, driving positive societal and economic transformation,” he added.

Meanwhile, MTC Orec chairman Dr Norshah Hafeez Shuaib said the investment reflects the trust and confidence that VentureTECH has in the company’s vision and capabilities.

“It will empower us to scale our operations, deliver cutting-edge biomethane projects, and make meaningful contributions to environmental preservation and rural development.

“Together with VentureTECH, we are setting a new benchmark for sustainable energy solutions that will benefit generations to come,” he said.

The partnership underscores the shared vision of VentureTECH and MTC Orec to advance Malaysia’s renewable energy ecosystem.

By championing impactful biogas projects, the collaboration promises long-term environmental, economic, and social benefits while driving innovation and sustainability in Malaysia’s energy sector, paving the way for a greener, more inclusive future.

MTC Orec is a local engineering company specialising in the bioenergy sector.

MTC Orec is a renowned leader in the design, engineering, procurement, construction, and commissioning (EPCC) of biogas facilities, with a proven track record in converting waste into renewable energy.

Notably, the company developed one of the first palm oil mill effluent (POME)-based biomethane plants to directly inject biomethane into Malaysia’s national gas pipeline, underscoring its leadership in aligning innovative solutions with Malaysia’s sustainability agenda.

Building on its successful collaborations with clients such as Gas Malaysia, MTC Orec is expanding its operations with four additional bioenergy plants under development across Johor and the northern region of Peninsular Malaysia.

These projects are crucial in addressing environmental challenges, including waste management and greenhouse gas emissions, while creating economic opportunities for local communities.

Meanwhile, VentureTECH is a government-backed impact investment company focused on catalysing the growth of local industries, particularly Bumiputera, in high-value and high-technology sectors through equity investment.

Source: Bernama

VentureTECH, MTC Orec partner to accelerate biomethane projects in Malaysia

Selangor has reaffirmed its position as the leading state in investment performance, recording approved investments of RM66.8 billion between January and September.

Selangor State Executive Councillor for Investment, Trade and Mobility Ng Sze Han said the positive investment performance showcases the vibrancy of Selangor’s industrial ecosystem, technological capabilities and competitive strengths in the manufacturing and services sectors.

Domestic investments accounted for the majority of the approved investments at 68.3% or RM45.6 billion, while foreign investments contributed 31.7% or RM21.2 billion.

Both domestic and foreign investments demonstrated remarkable growth, with domestic investments surging 74%, from RM26.2 billion, and foreign investments increasing by 68%, compared to RM12.5 billion in the same corresponding period last year.

During this period, Selangor attracted significant foreign investments, with the United States leading the contributions with RM4.8 billion, followed by Singapore RM1.8 billion, China RM1.76 billion, Japan RM564.6 million and Germany RM421.3 million.

A total of 1,371 projects were approved in Selangor, including 253 manufacturing projects and 1,116 services projects.

These projects are expected to create about 50,222 potential job opportunities, a substantial increase from the 997 approved projects and 23,060 potential job opportunities recorded in the same period last year.

The services sector continues to be the key driver of Selangor’s investment performance, with major contributions from sub-sectors such as information and communication, real estate, support services, transport services, and distributive trade.

Leading subsectors such as electrical and electronics, transport equipment, fabricated metal products, non-metallic mineral products, and machinery equipment contributed to the manufacturing sector’s strong investment performance. This underscores the sector’s resilience and continued growth.

“Selangor has certainly validated its case as a premier and attractive destination for investors. The future looks bright for Selangor, and we hope the upward momentum to continue and yield positive full-year results for 2024,“ Ng said.

Source: The Sun

Selangor outpaces other states with RM66.8b approved investments in January-September

Industrial automation and power systems provider Swift Energy Technology Bhd (SET) aims to increase export growth to 80% from the current 60% after its listing on Bursa Malaysia Securities’ ACE Market scheduled for Jan 8, 2025.

Tan also shared SET’s plans to venture into other regions, including the United Arab Emirates (UAE) and Qatar.

“The government has been instrumental in supporting us through initiatives like Matrade’s sponsorship for ADIPEC exhibitions and mid-tier company training. These efforts have helped us secure partnerships, such as with UAE-based Suwaidi Engineering,“ said Tan.

He said SET hopes to develop new products that can help address the Middle East market with the hotter ambient temperature.

“Currently, most of our projects cater to Asean and Asia-Pacific, where temperatures do not exceed 40°C. In the Middle East, temperatures range from 40°C to 55°C. Products for these conditions require special testing to ensure durability. We plan to acquire a temperature chamber simulating 55°C. Testing products in this environment will provide valuable data for this significant market,“ Tan explained.

Tan disclosed that Swift Energy Technology plans to expand operations in Indonesia.

“Indonesia is projected to become the sixth-largest economy globally and has the fourth-largest population. They demand food-related products like cooking oil, flour, sugar, and biodiesel, driven by Go Green initiatives requiring a 10% biofuel mix. It’s a vast market.”

He said SET, led by COO Chin Saw Yong, has been serving Indonesia since 2000. The company now has 300-400 installation bases and plans to address its existing markets while exploring new opportunities.

“SET’s collaboration with PT Sutrako, a specialist in offshore MCM maintenance projects, connects the company with Pertamina, Indonesia’s national oil company. With this support, we hope for expansion beyond Malaysia and Thailand,“ Chin said.

Additionally, Tan said, SET’s focus on digitalisation and continuous training has enabled the company to maintain a competitive edge in the industrial automation and power systems market.

“The ACE Market listing will provide us with the resources needed to invest in research and development, talent acquisition, and modern facilities. Currently, we have a complete range, and we hope during this one, two years ahead, we can focus on enhancing the current offering with a higher rating, with a wider coverage,“ said Tan.

Source: The Sun

Swift Energy aims to expand international footprint, boost export growth to 80% post-IPO

NOTWITHSTANDING the growth in the electronics manufacturing services (EMS) sector amid improved global demand and the increasing outsourcing trend, EMS companies on Bursa Malaysia have turned in a mixed performance owing to rising costs, high inflation and supply chain disruptions.

The movements in the share prices of closely followed EMS counters have reflected the developments in the companies.

For instance, Johor-based SKP Resources Bhd, V.S. Industry Bhd, Penang-based NationGate Holdings Bhd and P.I.E. Industrial Bhd have seen their share prices soar between 47% and 76% year to date (YTD).

Aurelius Technologies Bhd (KL:AURE) and EG Industries Bhd, both headquartered in Kedah, are up 29% and 51% respectively. But ATA IMS Bhd and JHM Consolidation Bhd are down 8% and 36% respectively.

“EMS players have corrected over the past year and the market has already adjusted for the weak outlook throughout the year. The market is now looking for recovery in this sector and we believe it will come. It’s a matter of when,” TA Investment Management Bhd chief investment officer Choo Swee Kee tells The Edge.

“EMS players ride the global consumer consumption demand. Hence, if global economic growth continues to chug along, demand for EMS services will be sustained. Other than the basic demand-supply dynamic, the current trend to diversify production due to China+1 or Taiwan+1 will benefit Malaysia’s EMS players and we expect this momentum to pick up in 2025. Overall, we are positive on EMS players in 2025.”

For SKP Resources, a recovery in consumer demand has given the electrical and electronics plastics maker a 27% year-on-year (y-o-y) improvement in its net profit to RM34.35 million for its second quarter ended Sept 30, 2024 (2QFY2025), on 22.2% higher revenue of RM635.29 million from RM519.91 million last year.

The company, which is a contract manufacturer for British consumer goods company Dyson Ltd in Malaysia, however, revealed in a statement that it is operating in a challenging business landscape of high inflation that has been weighing on production costs. In addition, it conceded that it is mindful of its heavy reliance on “a major customer” and is seeking to diversify its customer base.

Dyson recently said it intends to streamline its business in the region, including redeploying 47 employees from its advanced manufacturing facility to the global development campus in Johor. This is a move which TA Securities senior analyst Tony Chan Mun Chun believes could be intended for internal resource restructuring to boost efficiency rather than to cut down on its business here.

“We have confirmed with some local EMS companies that the order visibility from Customer D remains very healthy [with] no sign of slowing down. In fact, Customer D is looking to transfer some products from Mexico to Malaysia as it is planning to scale down the operations there,” Chan tells The Edge.

“Dyson’s move will benefit Dyson’s contractors in Malaysia with more business potential. However, we prefer to look way beyond Dyson for better diversification.”

Battling lower sales on a y-o-y basis as well as beaten down margins due to a softer US dollar, V.S. Industry posted a 37.5% y-o-y decline in net profit to RM30.6 million for the first quarter ended Oct 31, 2024 (1QFY2025).

According to PublicInvest Research’s Dec 9 note, V.S. Industry’s US-based customer was undergoing inventory rationalisation, resulting in a slowdown in production until the end of December.

“V.S. Industry’s management has revised its sales growth target higher to 6%, while net margin is estimated to come in the range of 4.8% to 5%, albeit subject to foreign exchange (forex) movements and labour costs,” said the research house, which is sanguine on the company’s outlook. It believes that stronger sales of RM300 million can be expected from a particular customer after the company bagged a contract for two new models in Malaysia.

“Meanwhile, the majority of V.S. Industry’s customers have given positive feedback on their respective outlook, led by more product launches. There is also the possibility of more products being transferred from Mexico to Malaysia by the said customer as it plans to shut down operations there. The strong earnings recovery is only expected to kick in by the second half,” says PublicInvest Research, which is maintaining its “trading buy” call on the stock with an unchanged target price (TP) of RM1.18 based on 15 times FY2026 forecast earnings per share.

To manage its expectations for the year ahead, RHB Research cut its earnings forecast for V.S. Industry’s financial year ending July 31, 2025 (FY2025) by 14% to RM233 million. But it maintained its forecasts for FY2026 and FY2027 as it viewed the Johor-based player’s job order prospects positively and foresees a recovery in demand and product launches lined up by key customers.

Meanwhile, there has been considerable scrutiny of Cape EMS Bhd’s prospects as the ACE Market-listed player’s share price was nearly halved to 41 sen in the first week of August following a slew of margin calls suffered by its group CEO and managing director Christina Tee. Her stake was slashed by more than a third from 38.4% to 11.1%, purportedly on the back of financial misguidance by the management to some institutional investors, leading to the selldown.

Cape EMS’ performance did not help its share price as it slipped into the red with a headline net loss of RM19 million in the third quarter ended Sept 30, 2024 (3Q2024), impacted by a RM12.6 million unrealised forex loss, RM4 million amortisation of intangible asset and RM2.2 million impairment on trade receivables. Following the results announcement, the counter sank further to 36 sen from 39 sen.

Cape EMS’ beaten down share price has reportedly drawn investment interest from the likes of Ekuiti Nasional Bhd (Ekuinas), which is believed to be mulling over a stake in the Johor-based EMS player.

In addition, businessman Chung Chee Yang started to accumulate Cape EMS shares on the open market and emerged as a substantial shareholder on Nov 13. As at Dec 10, he increased his stake to 8.3%, or 82 million shares, in the company.

Meanwhile, the Employees Provident Fund, which had emerged as a substantial shareholder on July 26, ceased to be one on Aug 15 after selling a portion of its shares.

Another player attracting interest is Penang-based EMS provider NationGate because of its improved bottom line. For the third quarter ended Sept 30, 2024, it saw a net profit of RM46.6 million on the back of RM1.4 billion in turnover, primarily driven by its data computing segment.

Interestingly, there have been concerns about the company’s future profitability as its net profit was heavily influenced by unrealised forex gains amounting to RM76.2 million for the quarter and RM142 million for the first nine months of the year. Had it not been for the forex gains, the company’s core operations might have faced a net loss.

Nevertheless, Kenanga Research believes the group is well positioned to benefit from the strong artificial intelligence (AI) server demand in the data computing segment and is poised for a recovery in its networking and telco divisions in FY2025. The research house has an “outperform call” on the counter with a TP of RM2.30 based on an unchanged FY2025F PER of 25 times.

“This represents a 30% premium to peers’ forward mean, justified by the group’s favourable exposure to the fast-growing networking product segment and its advanced capabilities, which yield better margins as well as enhance customer stickiness,” it says.

EMS players part of tech up cycle

Analysts have predicted for some time that the technology sector is poised for an up cycle starting in the second half of this year.

AmInvestment Bank Research said in a Dec 4 report that “interest will return to Malaysia Tech in 2025, given its relatively low holdings in investor portfolios, reasonable valuations and still positive long-term structural prospects”.

“While there is value, we advise investors to be selective, as high earnings expectations remain a key risk. We favour stocks with earnings certainty (via secured orders) or those that have been oversold, provided they have a clear strategy and long-term vision. The conclusion of the US elections and prospects of higher tariffs are a structural tailwind for Malaysia as local companies can benefit from supply chain relocation activities,” said the research house, which is “overweight” on the technology sector.

It has “buy” calls on ViTrox Corp Bhd, V.S. Industry, Malaysian Pacific Industries Bhd and Greatech Technology Bhd, with TPs of RM4.75, RM1.45 (from RM1.05), RM33.10 (from RM38) and RM2.60 (from RM5.53) respectively. It has “hold” calls for Pentamaster Corp Bhd and Inari Amertron Bhd, with TPs of RM3.50 and RM2.40 (from RM4.36) respectively.

As for the susceptibility of consumer-centric EMS companies to a potential economic slowdown on the back of weaker consumer sentiment, Choo says: “Our base case scenario is that with [US president-elect Donald] Trump in office, there will not be a US recession in 2025 and consumer demand should remain sustained. We are positive on the EMS sector due to its potential business recovery, corrected share price and the added factor of taking market share from China and Taiwan contractors.” 

Source: The Edge Malaysia

EMS players navigate uphill path despite tech up cycle

Eco World Development Group Bhd’s (EcoWorld) new collaboration with SD Guthrie Bhd and NS Corp Sdn Bhd to jointly develop an industrial park in Negri Sembilan is a “win-win” deal for all parties involved, according to analysts.

The 1,166-acre site, located in Bukit Pelandok within the Malaysian Vision Valley 2.0 and close to Kuala Lumpur International Airport, has an estimated gross development value of RM2.9bil.

“We view this positively as the strategic partnership leverages the unique strengths of both SD Guthrie and EcoWorld, driving mutual growth and long-term value creation,” said Maybank Investment Bank (Maybank IB) Research in a report.

As one of the largest landowners in Malaysia, the research house noted that SD Guthrie brings valuable “hardware” in the form of its extensive landbank.

Meanwhile, EcoWorld, as a leading property developer in the country with a strong brand presence and proven track record, plays a crucial role in unlocking the full potential of this landbank.

Maybank IB Research believed that EcoWorld’s strong branding will significantly enhance the value of the property, making it more appealing and marketable to potential business owners and investors.

Pending further details, Maybank IB Research maintained its earnings forecasts for EcoWorld.

Maybank IB Research has a “buy” call on EcoWorld with an unchanged target price (TP) of RM2.25 per share.

MIDF Research, in a note to clients yesterday, stated it was neutral to positive on the collaboration, which will expand EcoWorld’s industrial property development portfolio.

It highlighted that the property developer has been looking to expand its industrial property division due to its expertise in this segment and high demand for industrial properties in Malaysia.

The research house maintained a “neutral” call on the stock with an unchanged TP of RM2.01 per share. “We think the positives have been largely priced in as EcoWorld is trading above its latest net tangible asset value of RM1.66 per share,” it said.

Source: The Star

EcoWorld’s industrial park deal a ‘win-win’ for all

Penang’s strategic position as a global technology hub, coupled with its strong manufacturing capabilities and forward-thinking policies, positions the state as a key player in driving Malaysia’s high-tech export growth to the United States.

To explore strategies for navigating US trade dynamics and seizing market opportunities, the Global Navigator Series Penang will be held on Jan 7, 2025, at St Giles Wembley, Penang.

Themed “Expanding Horizons: Strategies for US Export Growth,” the event will feature a fireside chat between Standard Chartered Malaysia chief executive officer Mak Joon Nien and Penang Chief Minister Chow Kon Yeow, followed by a panel session and closing presentation.

The aim is to empower Malaysian exporters with the knowledge needed to make informed decisions and achieve sustained success in the competitive US market.

During the fireside chat, Chow will explore Penang’s unique advantages for exporters, sharing the state’s strategic vision and long-term plans to maintain its leadership in high-tech exports.

He will highlight Penang’s strengths in advanced manufacturing, research and development, and its ability to produce high-value products tailored for the United States market.

The conversation will further delve into the Penang government’s initiatives to enhance infrastructure, upskill talent and expand industrial zones to bolster its export ecosystem.

Additionally, untapped sectors such as halal and kosher products, professional services, and advanced medical technology – industries with significant growth potential for exporters – will be discussed.

Chow has been instrumental in driving the state’s progress, with a strong focus on industrial and infrastructure development.

His vision centres on fostering a robust ecosystem that empowers businesses and promotes sustainable economic growth.

A seasoned banker with extensive experience in investment and corporate banking, Mak brings over 27 years of esteemed service with Standard Chartered to the table.

In a separate session, participants will hear from Jonathan Koh, an economist and foreign-exchange (forex) analyst in Asia for Standard Chartered Singapore.

His presentation, titled “US & Malaysia’s Macroeconomic Outlook 2025”, will provide valuable insights into the evolving economic landscape and its potential impact on trade, investments and forex markets in the year ahead.

Attendees can expect actionable takeaways to navigate the complexities of global economic shifts effectively.

Join the Global Navigator Series

An initiative by the Export Excellence Awards (EEA) 2024, the Global Navigator Series will be held on Jan 7, 2025 at 2pm.

It is open to businesses. To register, visit this page.

The EEA 2024 is organised by Star Media Group Bhd, in partnership with Standard Chartered Malaysia, with PKT Logistics Group as a co-sponsor, and Malaysia External Trade Development Corp as patron.

The programme is audited by BDO.

Submissions for the awards are open now until Feb 13, 2025.

Source: The Star

Penang drives high-tech export growth to the US

The spent catalyst recycling facility, which is the first of its kind in Southeast Asia at the Gebeng Industrial Park here, will commence operations in early 2027.

The state-of-the-art metal recovery centre will be built by Toyo Engineering & Construction Sdn Bhd (Toyo-Malaysia), a subsidiary of Toyo Engineering Corporation. The project was awarded by Taiyo Koko Malaysia Sdn Bhd (Taiyo Koko), a subsidiary of Taiyo Koko Co Ltd, Japan.

Taiyo Koko Co Ltd president Kazufumi Suzuki described the strategic collaboration to set up the facility here as a significant milestone in advancing environmental sustainability and fostering a circular economy in Malaysia.

The facility will focus on the efficient recycling of spent catalysts, which are a waste material produced from the cracking of petroleum in oil refineries. The project, which is our first overseas expansion, aims to significantly reduce the environmental impact of spent catalyst disposal by recovering valuable metals and reducing waste.

Apart from enhancing recycling capabilities, the facility aspires to set a new benchmark for environmental stewardship and sustainable practices, driving innovation and responsibility in the recycling sector,” he said during the groundbreaking ceremony of the new facility at a hotel here yesterdaytoday.

Pahang Investment, Industries, Science, Technology and Innovation Committee chairman Datuk Mohamad Nizar Najib officiated at the eventfacility’s groundbreaking  here.

Meanwhile, Suzuki said the engineering, procurement, and construction (EPC) contract for the facility was signed on Nov 27 this year and followed by the groundbreaking ceremony yesterdaytoday (Dec 18).

“Toyo-Malaysia has always been supporting Taiyo Koko to realise their first overseas expansions over the years since its conceptual planning phase. The commercial operation for the facility in Gebeng facility is targeted in the first quarter of 2027.” he said.

Founded in 1949, Suzuki said Taiyo Koko has displayed a continuous growth in the manufacturing of rare metals and rare earths since the commercialisation of its proprietary technology to recover rare metals from spent catalysts across Japan in 1978.

“The company’s innovative processes enable the extraction and recovery of molybdenum and vanadium from heavy fuel desulfurization desulfurisation catalysts used at oil refineries.

“Taiyo Koko’s recycle system does not only safeguard the environment but also ensures a stable supply of precious metals through advanced recovery and purification technologies,”  he said.

“The approach supports resource conservation and enhances supply chain stability on a global scale. The facility here demonstrates its commitment in sharing its expertise and driving sustainable development internationally.” he said.

Toyo-Malaysia, a prominent engineering firm, is dedicated to executing projects that adhere to the highest standards of safety, quality, and sustainability.

Meanwhile, Nizar expressed his excitement with Taiyo Koko for selecting Pahang to house their spent catalyst recycling facility that would transform waste streams into sustainable solutions.

“We welcome the investment from Japan, which will not only ensure economic spillovers but create job opportunities and pave the way for more Japanese investors to set up businesses in Pahang,” he said.

Source: NST

Taiyo Koko to build metal recovery centre

Xindeco IoT Malaysia Sdn Bhd has inaugurated its cutting-edge radio frequency identification (RFID) manufacturing facility in Nilai, Negeri Sembilan, which stands as the largest RFID production hub in Southeast Asia.

In a joint statement, the Malaysian Investment Development Authority (MIDA) and Xindeco IoT said the strategic investment positions Malaysia as a key player in the global RFID technology landscape.

They said the 30,000-square-foot plant, located in the Arab Malaysian Industrial Park, is capable of producing one billion RFID tags annually.

“These solution will serve various sectors, including retail, healthcare, logistics, and supply chain management across the Asia Pacic region,” they said.

MIDA chief executive officer Datuk Sikh Shamsul Ibrahim Sikh Abdul Majid said the investment by Xindeco IoT demonstrates the confidence global companies have in Malaysia’s technological capabilities and its skilled workforce.

“This new RFID manufacturing facility strengthens Malaysia’s position in the global supply chain and creates high-value jobs for Malaysians.

“The facility aligns perfectly with our New Industrial Master Plan (NIMP) 2030, supporting our goal to become a regional technology leader,” he said.

Xindeco IoT is a subsidiary of Chinese tech (technology) giant Xiamen Xindeco IoT Technology Co Ltd.

Source: Bernama

Xindeco IoT inaugurates RFID manufacturing plant in Nilai

AS competition in the artificial intelligence (AI) chip market heats up among semiconductor giants such as Nvidia Corp, Advanced Micro Devices Inc (AMD) and Intel Corp, one company stands to gain regardless of who the winner of the chip battle is — Micron Technology Inc.

Positioned as a critical supplier of memory and storage solutions, American chip giant Micron benefits from the industry-wide demand for the high-performance components essential to AI systems.

Amarjit Singh Sandhu, corporate vice-president of assembly and test NAND operations for Micron (Singapore and Malaysia), says devices such as smartphones and laptops need different types of semiconductors to build a system.

“Imagine this: You need a set of eyes and a set of ears, you need a brain, and you need to signal where the information needs to go. Your smartphone receives and interacts with various signals, from the global positioning system (GPS), Bluetooth, WiFi to near-field communication (NFC),” Amarjit tells The Edge.

“For these signals to come into your phone, you need to have chips that can receive and convert them from analogue to digital. So, different semiconductor giants will build different specialised chips.”

He adds that the “brain” tells the signal to be stored at a certain location. When that signal is stored, Micron’s product comes into play. The “brain” is what Intel, AMD and Nvidia build, whereas Micron makes memory and storage chips.

“Micron is not competing with them. Instead, we are complementing each other because any ‘brain’ would need temporary memory and storage. Obviously, Nvidia has been commanding the lion’s share, while AMD and Intel are playing catch-up.

“All of us have our own set of challenges, but the way I see it, Micron could complement all of them. In other words, no matter who wins, we win as well. After all, they need memory, and they need storage,” he says.

US$2 bil invested in Penang

In November 2018, Micron announced a US$1 billion greenfield investment plan over a span of 10 years for its new Centre of Excellence (CoE) for solid-state drive (SSD) assembly and testing in Batu Kawan Industrial Park, Penang.

In the fourth quarter of 2022, the company announced a brownfield investment of US$1 billion for its second factory at the Batu Kawan site, which was officially opened in October 2023.

“Our total built-up of 1.5 million sq ft [combining the first and second factories] is almost fully occupied to support our future growth. Simply put, we are operating at an optimal level,” says Amarjit.

He observes that the large-scale cloud service providers, also known as hyperscalers, are building up huge data centres primarily to support the AI drive.

“Obviously, AI is very much the buzzword of today. I have been listening to the earnings calls of these hyperscalers recently, and I think all of them will continue to invest not just in Malaysia but also many parts of the world.”

He says these investment plans suggest that AI is “very hungry” for data centres, which will lead to a significant increase in workloads. However, the current infrastructure falls short of what is required.

“Looking at the amount of money that has been pumped in and is going to be pumped in, I think the data centre and AI boom is going to go on for a while,” he says.

Amarjit acknowledges that because Micron is a multinational corporation (MNC), Micron Malaysia lacks visibility of where its end-customers are.

“We make the products and sell them, but we do not know where they will end up. But the fact is that the trend of building more data centres everywhere is not a nice-to-have; it is a must-have. The UK, Germany and Spain are supporting more data centres.

“So, it is more important for Micron to look at this trend globally. With the data centre and AI boom, the world would need more memory and storage chips, including high-bandwidth memory (HBM). We are here to support the AI growth, whether or not the data centres will be built in Malaysia,” he stresses.

Apart from HBM, Micron could also supply enterprise SSDs and some specific memory modules as well as other memory and storage products to the data centres.

“In Malaysia, we build SSDs, and our Batu Kawan site is a CoE for SSD. So, we should benefit from the data centre boom,” Amarjit says.

Asked about the possible impact of the Malaysian government’s review of tax incentives for data centres, Amarjit reiterates that although Micron builds its products in Malaysia, they are sold to hyperscalers worldwide.

He says: “We welcome data centre investments in Malaysia, as we will benefit from the AI growth. But even if these investments do go elsewhere, we will still continue to benefit because these data centres have to be built in other countries, if not Malaysia.”

Notably, Nikkei Asia had in June reported that Micron was considering building HBM in Malaysia to capture the AI boom. Amarjit says: “I think Micron will make our announcement accordingly, but this [news] is definitely not announced by Micron. So, we’ll avoid commenting on this information.”

Nevertheless, he points out that HBM is not the only product that supports AI.

“Today, Micron produces all of our HBM in Taiwan. As the need and demand grow, we will review and decide where else our HBM operations need to go. That’s the situation. We have not made any decision.

“One thing is for sure: We have a good range of memory modules to support the AI market. Micron is well-positioned to capture these opportunities.”

‘The best is yet to come’

Amarjit likens AI to the advent of the internet, recalling that when it emerged in the late 20th century, there were doubts about its potential to change the world. Today, the world stands at a similar juncture, with AI poised to play that transformative role. “It’s a long runway and that’s why we keep saying that, for memory companies like us, the best is yet to come because AI will drive a new cycle.

“Whatever we have been supplying in the past — whether for phones, laptops, PCs and everything for industry, for data centres — will still be there. But this is probably a brand-new era for us to cater for the needs and wants of the industry.”

Amarjit believes AI is where Micron positions itself with new products to support, and it will be the group’s new revenue stream in the coming years. “We are probably in a good place, where our business of the past is still there and we have AI as the next big thing.”

Like other global chipmakers, Micron has been navigating the geopolitical tensions between the US and China for the past eight years. In addition, the Covid-19 pandemic has further strained the overall supply chain.

Amarjit says Micron has positioned its manufacturing in different geographical locations to mitigate shocks.

“So far, it has worked well for us. We did not miss any customer demand during Covid. I would probably say this tension is going to be here to stay. For most industries, I think it’s a new normal and we will have to adjust to it.”

Fortunately, he adds, Malaysia has been very friendly to most countries, and that is very helpful for companies such as Micron.

“On the ground, we don’t feel any negative impact from the trade war because the government has set up an environment that is very business-friendly.”

Bridging the talent gap

Micron started its first facility in Penang in 2019. Today, with two facilities, the group employs about 5,000 people, including operators, technicians, engineers and research and development (R&D) staff.

“On average, we hired 1,000 people every year over the past five years. At this point in time, our workforce of 5,000 is quite sufficient to meet the needs of our two facilities. But we will continue to hire good talents [as the need arises],” says Amarjit, adding that the group has relatively different hiring strategies compared with other companies.

For the hiring of operators, Micron engages with technical and vocational education and training (TVET) schemes, government agencies and industry institutions. For the hiring of technicians, the group engages with the polytechnics.

“The biggest challenge is always engineers. Like many companies, we also engage with universities to attract human talent. At the same time, we also work on the non-traditional fronts. For instance, we are trying to encourage women engineers,” he says.

Micron is a founding member of the Society of Women Engineers (SWE) in Malaysia. The group is working with industry partners to get more women interested in engineering.

“Hopefully, through SWE, the experienced lady engineers will come together to encourage and excite the younger girls about engineering as well as provide them with mentorships.

“Meanwhile, we are also trying to get women, who had taken one or two years off from their working life for family reasons or because of personal challenges, to return to the workforce. All these efforts can help bridge the talent gap,” says Amarjit.

Another non-traditional path that Micron is taking is that it is the first company in Malaysia to engage a uniformed group, specifically military veterans.

“We have given talks to 500 former military folk and recently hired 25. We are trying to get more of them on board; we are identifying suitable job positions for them so that they can fit into our organisation.

“For example, some veterans from the Air Force dealt with aircraft. So, if we give them six months of training, they could be good technicians or supervisors. Overall, Micron has a fair representation with respect to gender, race and ethnicity,” Amarjit says. 

Source: The Edge Malaysia

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