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NE Asia FEB 2005 Issue
Industry & Market
 

Infineon Invests US$1B in Malaysian Fab

Infineon Technologies AG will invest US$1 billion to set up a wafer fab at Kulim Hi-Tech Park for power and logic semiconductors used in automotive and industrial power applications. Ground breaking for the Malaysian fab is planned for early 2005 and ramp-up is scheduled for 2006. At full capacity, the fab will employ 1,700 staff.

The new front-end facility will produce power, power-bipolar and mixed-signal technologies products at feature sizes of 0.35um and below on 200mm wafers, according to Loh Kin Wah (photo), president and managing director of Infineon Technologies Asia Pacific.

Loh added that the US$1 billion investment will be made in stages according to the market demands and believes that there is ample space for expansion at the park. The new plant complements Infineon's already existing production sites for non-memory products in Munich-Perlach, Regensburg, Villach and Dresden in Germany as well as Altis Semiconductors, a joint venture with IBM in Essonnes, France.

The Kulim Hi-Tech Park currently hosts wafer foundry player Silterra Malaysia Sdn Bhd, Intel Products Sdn Bhd and contract manufacturer Celestica Sdn Bhd, among various other electronics manufacturers with investments of about US$4 billion.

According to Loh, the key reasons Infineon chose to expand in Asia was to reduce its market risk with the swinging US dollar-to-euro fluctuations, and to be closer to the growth markets in automotive and industrial power applications.

Malaysia has pegged its currency at 3.8 ringgit to one US dollar since September 1998 after the Asian currency crisis, affording manufacturers a stable fixed exchange rate. The Southeast Asian region has also seen a rise in car and car parts assembly and manufacturing investments in recent years.

Automotive Sector

Despite a soft market outlook for 2005, Infineon is banking on the automotive sector to give it a boost in coming years.
"While the general outlook for the industry is cautious, the automotive segment is expected to experience substantial growth of about 10% over the next few years," said Loh. "More demanding requirements with respect to reliability, security, and weight as well as emission control and power reduction of cars, will also fuel growth."

Siemens VDO Automotive AG, a car electronics supplier and an Infineon customer, had in June forecast electronics components to represent about 40% of a car's value by 2010, compared with 23% now. As an example of the opportunity, only 10% of all cars in Europe are currently equipped with a satellite-based navigation system.

by Julian Matthews

(February 2005 Issue, Nikkei Electronics Asia)

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