Soldering a regional platform for semiconductors

loading At Semicon Singapore 2014. Semicon Singapore has revamped itself into Semicon South-East Asia.

The annual Semicon Singapore event, a regional exposition of the semiconductor industry, has been taking place for the last 21 years. However, this time around, Semicon Singapore has revamped itself into Semicon South-East Asia (Semicon SEA), and will now rotate between being held in Singapore and other locations within the region – beginning with Penang.

InvestPenang is the supporting partner of Semi in organising this year’s Semicon SEA 2015, which will be held at sPICE Arena from April 22 to 24 and will be the region's largest microelectronics event.

In conjunction with the exposition, InvestPenang will be hosting a networking event and site visit to the Batu Kawan Industrial Park and factories to showcase Penang’s semiconductor ecosystem to potential investors. On top of that, InvestPenang is also working closely with Semi to organise its Supplier Search Program during the Semicon SEA Show to match suitable capabilities and streamline the supplier chain ecosystem with two major OEMs, one of which ranks among the top 5 for front-end equipment manufacturing, while the other is a formidable back-end equipment supplier.

Penang Monthly meets up with Ng Kai Fai, president of Semi SEA – the regional branch of Semi – to chat about the roles Semi plays, the mission of the tradeshow and his take on the industry in Malaysia and South-East Asia.

Ng Kai Fai, president of Semi SEA..

Tell us more about Semi. What is its mission?

Ng Kai Fai: Semi is a non-profit global trade association for the semiconductor industry. We facilitate the growth and development of the industry through working with partners, and help Apart from organising conferences and technical workshops, we are also involved in government advocacy; this trade exhibition is realised with the collaboration of the Economic Development Board of Singapore (EDB), Malaysia Industry Development Authority (Mida) and InvestPenang.

Why hold the trade exhibition inPenang?

Penang is considered a silicon hub, and the state has a complete ecosystem for the semiconductor industry. There are more than 200 semiconductor companies in Malaysia’s Free Industrial Zones; South-East Asia’s microelectronics manufacturing ownership accounts for almost 27% of the world’s assembly, packaging and test production, and of this, Malaysia alone takes about 11% of the global square footage.

Besides, many electronics foundry companies can be found in Malaysia, such as Altera, Silterra and X-Fab. Comparing the situation among South- East Asian countries, Malaysia – and Penang in particular – becomes a viable choice for having the event.

Many electronics foundry companies can be found in Malaysia, such as Altera in Penang's Bayan Lepas Free Industrial Zone.

What can we expect from the exhibition?

Semicon is a place where businesses are made. The exhibition involves companies from various sub-sectors, namely equipment/materials, packaging, test assembly, fabrication and foundry. It is a platform where suppliers can leverage their outreach to their potential clients within the region.

Apart from Malaysia and Singapore, there will be 13 other countries from around the world congregating at the Penang show; we are trying to enhance and develop the South-East Asian ecosystem, but we are not limiting ourselves to the region. As a matter of fact, we have oversold the exhibition booths and are still figuring out how to accommodate additional requests!

Semi acts as a platform to connect the industry in the region with other regions in the world, and Semicon SEA 2015 will be a good start. Collaboration between regions is important to complement the needs of the industry in other emerging countries.

Semicon is a place where businesses are made.

How about investors? Are there any specific elements that will be referred to by investors when it comes to making decisions?

There are probably, in my mind, four main areas.

In order to compete well in the industry, technological innovation is an important component to make a device cheaper and, at the same time, faster. In this regard, innovation very much relies on the governance of a corporation.

Productivity is another dominant factor which investors look at – the productivity of skilled workers. Penang and Malaysia as a whole have a fairly large educated and English-proficient talent pool. This bodes well with the industry and is a great start. The next challenge is obviously a continuous focus on training to enhance the added value of that workforce.

Another thing is the right cost structure and infrastructure. These are the two key components for our industry to consider. Infrastructure must be easily available and accessible; it is fundamental to the building of a foundry. However, building the facilities around the foundry is a key concern, and there have been many examples in neighbouring countries of how oversights can doom the foundry.

Maintaining a cost structure that is viable is also a factor, and utilities are one of the key factors to consider. While utilities and land in Singapore are getting expensive, Malaysia and Vietnam have fairer advantages.

All these boil down to the last factor: government policy. Government stability and policies have to be right to give confidence to investors; tax break incentives are a common policy in most countries.

What other incentives can entice investors?

Apart from tax holidays and other government policies, creating a vibrant innovation environment between the private and public sector is essential. The government should play a role to link students in schools and universities with the industry.

Semi SEA supports a policy where collaboration between R&D activities in universities and the industry can be enhanced. In the case of Singapore, we do see more active collaboration between universities and the private industry taking off. You should note that such collaboration has benefitted Taiwan, which is one of the major semiconductor hubs, greatly. This is what we require.

Starting them young. Semi suggests that governments should play a role to link students in schools and universities with the industry.

With rising challenges and competition from China and India, how can South-East Asia and especially Penang position themselves?

Malaysia is largely a back-end centric operation in the manufacturing industry and in fact, as I had earlier pointed out, South-East Asia is very much gravitated towards the back end of the industry’s line manufacturing. For 2015 and 2016, Semi estimates a spending of almost US$5bil on front-end and back-end equipment in the South-East Asian region, and another US$14bil on materials including US$11bil on packaging-related materials. This is a significant market!

China is leading in the packaging industry due to its investments, and it has a huge market. The key question is: how do we compete effectively, as well as complement them? Malaysia went through a phase of moving up the value chain in the semiconductor industry. Penang, specifically, began with a human capital intensive industry and shifted to automation in the early 1980s. Based on that, Malaysia is veering towards design and development, and I think it adds significant value to the ecosystem.

Would Semi be able to facilitate the transfer of knowledge and technology from MNCs to our local SMEs, thus assisting in improving their level of innovation?

This is an issue faced in Malaysia as well as in Singapore. SMEs always play a supporting role to the bigger players in the industry. When MNCs or OEMs move up the value chain, most SMEs are not sufficiently forward-looking enough in making technological investments. SMEs are encouraged to take part in our Supplier Search Program; the two major OEMs are major players that look for suppliers in the region via the programme.

The Semicon SEA tradeshow can assist SMEs in two ways. By participating in the Supplier Search Program, SMEs can understand the operating standards that are required in the semiconductor ecosystem. Secondly, as OEMs enhance their capabilities, SMEs will need to upgrade their capabilities if they wish to stay in the industry.

What are the challenges that the semiconductor industry is facing in Malaysia and South-East Asia at large?

Two key challenges: how do we retain the talent pool in the industry, and how do we direct potential candidates towards engineering?

Semi endeavours to address both issues. First, in terms of talent development, we organise workshops and seminars, for example, technical symposiums include the sharing of technical challenges and the sharing of know-how.

Second, how to encourage continuous talent in the sector; right now, Singapore and Malaysia are facing the similar problem of fewer students being interested in technical programmes. Semi is working with industrial partners and members to alleviate and hopefully reverse this trend. During the Semicon SEA tradeshow, we are holding a programme called Semicon U, similar to Hi-tech U in the US.

Before secondary school students, sixth form (or Junior College) students and polytechnic students pick their universities, they are invited to join a half-day event where CEOs of the industry share their experiences. Last year, we invited 3M (formerly known as Minnesota Mining and Manufacturing Company) to speak about touch technology. We try to excite students that this is a great industry to work in and inculcate the passion for engineering among students.

In my view, the biggest challenge is how to encourage start-ups and technical entrepreneurs in the region. In my humble opinion, the semiconductor industry in Malaysia and Singapore and probably within South-East Asia is lacking an environment for creative undertakings. This is primarily because the environment to encourage creative and innovative risktaking start-ups is scarce.

Semi SEA is planning to set up a podium called the innovation discovery hub in future shows where we would like to encourage start-ups to come free-of-charge as outreach to the microelectronics industry, using the tradeshow as a platform to promote their ideas.

What is your forecast for the industry for the next three years?

In general, 2015 is going to be a significant year for the semiconductor industry; we forecast a growth of about 15% this year.

It is interesting to note that previously the semiconductor industry was fuelled by the adoption of PCs and smaller sized chips. That era drove us for about 20 years. The next era is about mobility and the Internet of Things (IoT), followed by cloud computing and big data analysis.

This is an exciting era, whereby IoT will drive our industry further. Semi very much encourages this new exciting development. I am confident that the industry will accelerate because of IoT, cloud computing and big data analysis.

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