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News from Asia-Pacific

Motorola to Move Flip-Chip, QFP to Malaysia

Motorola Inc is transferring flip-chip technology and high-volume quad flat pack production to Malaysia from plants in the US, Hong Kong and Japan. Motorola Malaysia managing director J A Lew said the 250 million ringgit (US$66 million) investment will be completed by 2003 and will create 500 new jobs.

"The project is massive and complex, involving more than 900 pieces of high-tech equipment," said Lew. "We started planning in the first quarter of this year and moved into the implementation stage in the second quarter. We are on target for the new flip-chip production to come onstream by end-August, and for expansion into high-volume QFP production within the first quarter of 2003."

Lew expects the Malaysian plant to register a 25% rise in revenue from the new investments, in line with global chip industry projections of between 20 and 30% growth in 2003, barring unforeseen circumstances. He cited good infrastructure, extensive suppliers, encouraging government support, and the availability of a pool of trained labor for Motorola's continued commitment to Malaysia.

Motorola set up the Petaling Jaya plant in 1972 and has invested US$1.14 billion over three decades. Occupying 70,600 sq m of built-up space on an
8-hectare site, the plant is said to be the company's largest chip packaging and testing facility worldwide. The new expansion will add another 9,290 sq m of manufacturing space.

Restructuring

In addition to the Petaling Jaya plant, Motorola has plants for its two-way radio and energy businesses in Penang and a software design center based in the Multimedia Super Corridor, with a total staff strength of 7,500 in the country. Lew was speaking at the announcement of the award of a 50 million-ringgit (US$13m) contract to local burn-in services contractor KESM Industries for burn-in and test services for the chipmaker.

Motorola Inc's shift to Malaysia and, notably China, is part of the company's restructuring exercise begun two years ago to reduce operational costs globally. On completion of its manufacturing consolidation, the US-based chipmaker will only have manufacturing operations in the US, China and Malaysia.

Lew said Motorola was also raising its profile in China with recent plans to build a US$375 million advanced chip production base in China's Sichuan province.

In the last two years, Motorola has been pummeled from poor demand for cell phones, rising manufacturing costs, bad investments and worldwide slumps in the semiconductor and telecom industries. In late June, the company announced plans to slash 7,000 jobs, or 7% of its worldwide workforce to 93,000, by the middle of next year from a peak of 150,000 in mid-2000.

Company officials continue to maintain that Motorola will return to profitability by the end of the year with a turnaround spurred by new products. Most analysts, however, are predicting the company will have flat sales and struggle with growth all through next year.

by Julian Matthews, Kuala Lumpur

Websites:
KESM Industries: http://www.kesmi.com/
Motorola: http://www.motorola.com/

(September 2002 Issue, Nikkei Electronics Asia)

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