THE GLOBAL FORTUNE 500 company Lam Research Corporation (Lam Research) announced last February that it will soon be investing in Penang.
A global supplier of innovative wafer fabrication equipment (WFE), Lam Research is expected to complement Penang’s established position in back-end high technology machinery and equipment, and semiconductor assembly and testing. Electronic chips are tricky to produce and require a core set of sophisticated processes and fabrication equipment – this market is where WFE companies like Lam Research have an advantage.
Data from the global industry association of electronics manufacturing and design, or SEMI, forecasts the WFE market in 2021 to record a mid-single digit percentage growth hitting a new high of USD61bil driven by memory spending recovery, leading-edge foundry and logic investments.1 Meanwhile, Penang Institute’s calculation of SEMI’s data2 shows that the WFE segment makes up about 85% of total global sales of semiconductor manufacturing equipment.
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Penang Monthly meets up online with the corporate vice president of manufacturing Mike Snell and the general manager of Lam Manufacturing Malaysia (LMM) Soon Kuek to discuss a broad range of topics, from the specifics of Lam Research’s investment in Penang, women in STEM and talent issues in the industry; to the impact of Covid-19 on the semiconductor and semiconductor-related sectors, and the effects of the US-China trade war.
An Established Ecosystem Keeps Penang on Investors’ Radar
It is for the following reasons that Penang is on the radar for investors: good access to skilled talent with cumulative industry experience; proximity to suppliers in the semiconductor and semiconductor-related business ecosystem; as well as a well-connected logistics set-up. “We have heard many good experiences from the companies that have continued to invest and operate in Penang,” says Snell. The year 2020 also welcomed investments from companies in the electronics and electrical and machinery and equipment industries such as Bosch Automotive Electronics and Ultra Clean Holdings.
Construction is well underway for Lam Research’s manufacturing site with its expected completion fixed for May 2021; the 700,000 sq ft plant will sit on a 34-acre land at the Batu Kawan Industrial Park. About 400 high-value jobs are to be created by the end of 2021, and the number is subject to grow according to corporate planning. Active hiring started in mid-2020 for engineers, technicians and operators. At present, Lam Research is renting a facility at the Bayan Lepas Industrial Park for the recruitment and training of new talents. The organisation is also exploring supply chain localisations with capable local suppliers to grow synergistically.
Women are An Untapped Source for STEM
Mike Snell, corporate vice president of manufacturing.
Soon Kuek, general manager of Lam Manufacturing Malaysia.
A STEM study conducted by Penang Institute highlights a disjointed correlation between students’ preference for Science subjects and a shortage in the STEM workforce. To illustrate, despite having expressed keen interest in pursuing life sciences-related courses for their tertiary education while in upper secondary, many female top performers displayed a greater proclivity to drop out halfway through their STEM studies. A lack of confidence and an unwillingness to compete in the STEM market are cited as reasons.3 Even if these students go all the way, many do not “stay in their careers for long as they wear many hats both in their personal and professional lives,” says Soon Kuek. “But we are keen on initiatives to increase their participation in STEM.” She adds that women should be encouraged to be creative agents within their organisations.
The organisation is also committed to investing in the state’s STEM development, e.g. to upskill and retain talent in the industry, and to widen the overall skillsets of the labour force. This dedication is unmistakable; many such companies in Penang have entered into public-private partnerships with the state government to spur interest in STEM through cooperation with the Penang Science Cluster, Penang Digital Library, Tech Dome Penang and Penang Math Platform.
Opportunities certainly abound in STEM and especially in the semiconductor and semiconductor-related industry, but Lam Research believes that such careers should allow for self-enrichment and self-fulfilment as well.
The Semiconductor Industry Bears the Brunt of the Trade War
Trade tensions continue to grow between the US and China, and one way or another, technology companies are getting the short end of the stick. Consolingly, the global semiconductor spending remains robust. According to Snell, the decision for Lam Research to channel its investment in Penang pre-dates the prevailing trade war. “The company operates in several locations, and we follow the global developments, trade laws and local regulations closely. There continues to be political and commercial changes taking place from time-to-time.”
Lam Research’s Kiyo45 etch machine.
The fundamentals of the local semiconductor and semiconductor-related ecosystem ensure Lam Research’s growth trajectory in Penang as a dynamic location to invest and do business in, against the backdrop of challenging global developments. This is in addition to Covid-19 accelerating certain trends, e.g. increased automation and work-from-home exercises, that would otherwise have exhibited a more gradual growth.
These trends drive a strong demand for electronics which in turn boosts the semiconductor and semiconductor-related industry, and underpins SEMI’s estimates4 that the pandemic-inspired demand for chips is driving an increase in global fabrication equipment spending in areas such as communications and information technology infrastructures to personal computing, gaming and healthcare electronics.
Lam Research’s journey in Penang is only just beginning. More can be expected as the organisation ramps up its Batu Kawan facility and delivers its first shipment come mid-2021. Lam Research has also expressed hope in supporting Penang and the nation’s aspirations to move up the value chain and to widen opportunities for higher income employments.
1SEMI Equipment Market Data, September 2020.
2SEMI. Chip Manufacturing Equipment Spending to Hit Record High $70 Billion in 2021 After Strong 2020, SEMI Reports.
3Adapted from Student’s choice of STEM study in secondary and tertiary education in Penang. (Forthcoming). Penang Institute.
4SEMI. Covid-19 Drives Rise In Global Fab Equipment Spending, SEMI Reports.
Lee Siu Ming is a senior analyst at Penang Institute, and believes in the Latin phrase Audi alteram partem, loosely translated as “Listen to the other side".