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News from Asia-Pacific

Manufacturers Expect Recovery

Local semiconductor contract manufacturers are indicating that the industry slump may be over and the long road to recovery has begun. "We definitely have already seen the bottom," said Roy E Pittman, chief executive officer of IDS Electronics Sdn Bhd. "The turnaround is there and judging from the markets, things are moving up."

Pittman said the industry is getting back into the "normal mode" of business with customers giving rolling schedules and eager to secure future contracts, unlike the slow pace of the last 18 months. "Currently, we are in the midst of intense negotiations with several US-based fabless customers for possible long-term strategic alliances, and we are confident of securing the deals," Pittman said.

IDS is one of three local contract manufacturers based in Perak, a state about 200km south of better-known chip-assembly hub of Penang. IDS's nearby rivals Carsem Semiconductor Sdn Bhd and Unisem Bhd, both seen badly hemorrhaging from the downturn, have also indicated positive signs for the second half of the year.

Carsem, the largest of the three, has stated it is banking on the take-up rate for Bluetooth-enabled products and sales from advance packages such as micro leadframe (MLP), flip-chip-on-leadframe (FCoL) and SiP (system-in-package) to drive growth in the coming years. Part of the public-listed Malaysian Pacific Industries Bhd, Carsem has narrowed losses in recent quarters, and in March announced plans to enter China and set up a plant in the Suzhou Industrial Park in Shanghai. Unisem has mirrored the positive trend with better quarter-to-quarter results, new hirings and an interest in China as well.

Bright Future

Pittman, who pioneered the set up Carter Semiconductor, the forerunner to Carsem about 30 years ago, said last year's recession was surprising in its severity, affecting all players, large and small. "The glut has disappeared and we are in a situation now where customers are very wary of keeping inventory," he said. "But because the downturn was so serious, we are optimistic that we are in for a long run before the next one. We are already feeling the pressure to move quickly against our rivals."

Set up in 1996, IDS received a boost when public-listed Intan Utilities Berhad bought into the company in 2000 with a multi-million ringgit capital injection. IDS's current services include wafer probe, wafer back-grind, assembly and final test, tube packaging, bulk packaging and tape and reel. Its main packages include SOT-23, SOT-223 and D-Pak-3L, with future plans to include SOT-89, TO-263 and flip-chip capability.

Pittman said the plant expects to quadruple its revenue performance this year, and achieve a projected 60 million ringgit (US$16 million) in sales for its coming fiscal. "We have diversified our customer base and focused on improving yields and cycle times with a great measure of success," he said.

IDS's customer base comprises 50% US and Malaysia-based US companies, 40% Japanese companies, and 10% from European sources. The company currently has 300 personnel, of which 30% are engineers and technical staff, and has a total land area of 88,000 sq meters.

by Julian Matthews, Kuala Lumpur

Websites:
Carsem: http://www.carsem.com
IDS Electronics: http://ids.idsesb.com.my
Unisem: http://www.unisem.com.my

(July 2002 Issue, Nikkei Electronics Asia)

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