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Dec 6 - 12, 2005
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NE Asia DEC 2005 Issue
Industry & Market

Kuala Lumpur
Electronics Manufacturers Enjoy Boom in Malaysia

Malaysia's electronics industry is showing signs of a boom after a spike in export sales in August of 10%, the fastest pace in five months. Export sales of chips and other electronics-related goods rose to US$6.04 billion, representing nearly half of all exports that month. The numbers are significant considering the increased competition from China.

Positive Trends into 2006
Semiconductor equipment manufacturer LKT Industrial Bhd attributed the rise to an increase in outsourcing contracts by the US and European companies, after a downturn in the industry in the past few years.

"Due to the rising cost of labor in their countries, these companies began to turn to countries such as Malaysia and Thailand to outsource their manufacturing," said LKT CEO Vincent Loh.

Loh added the company had secured about US$11.8 million worth of manufacturing contracts for front- and back-end semiconductor equipment this fiscal year. In anticipation of demand, LKT is setting up a new US$8.4 million plant in a 2.8-hectare site in Bayan Lepas, Penang. Set to be operational by the second half of 2006, the new plant will add 200 staff and have a production area three times larger than its current plant.

Handheld-, Automotive-Driven Growth
Flexible circuits manufacturer Qdos Flexcircuits Sdn Bhd said it saw a rise in demand particularly for products going into handheld devices, mobile phones and digital audio products.

Qdos's financial controller S P Whong said the company expects at least a 10% rise in revenue extending in 2006 on the back of sales to major brands such as Motorola, Sharp, Sony, Seagate, Canon and Panasonic.

Whong added that the establishment of Penang as the second cybercity under the Multimedia Super Corridor Initiative will allow manufacturers to recruit more capable foreign experts in the future.

"In the short term, we need to improve yields and reduce overheads, but in the long term we need to upgrade our products and technology and target the high-end markets in order to compete," commented Whong on the competition with China.

KESM Industries Bhd executive chairman Samuel Lim said the semiconductor business climate in Malaysia was holding well despite intense competition from lower-cost countries like China. The independent integrated circuit burn-in and test services provider saw a 19% rise in revenue in fiscal 2005.

Lim expects demand will continue to remain strong in 2006 based on continued demand for mobile phones in emerging markets, a new generation of high-performance computers, and growing electronic applications in cars. "These are the bright spots we are focusing on," said Lim.

by Julian Matthews

Ace Technology:
KESM Industries:
LKT Industrial:
Mio Technology:
Qdos Flexcircuits:
Vignani Technologies:
Zycast Technology:

(December 2005 Issue, Nikkei Electronics Asia)

China Update 2005
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