See Malaysiakini videoclip of the press conference this morning ;-)
The Ministry of Finance and Khazanah Nasional must explain both to the Parliament as well as to the Malaysian public in general on the calamitous performance of its wafer fabrication subsidiary, Silterra Malaysia Sdn Bhd.
As highlighted by the Member of Parliament for Labis, Chua Tee Yong in Parliament last Wednesday, Silterra has incurred losses of RM1 billion in the financial year 2007, despite the fact that the Government has invested more than RM5 billion in the company since 1994.
A check with the records in the Companies Commission of Malaysia (SSM), the company also made losses of RM864 million and RM646 million in 2005 and 2006 respectively. The revenue generated by the company in these years were only RM461 million and RM551 million, lower than even the losses incurred!
What is most fearful is the fact that Silterra is seeking additional RM8.5 billion to fund its expansioin operations despite the fact that its shareholder capital have been reduced from RM5 billion to only RM798 million in 2006, possibly even lower in 2007.
Malaysia used to attract some of the biggest technological giants such as Intel, Motorola and Dell to develop and manufacture their latest technologies in the country. However, in the past decade, we have clearly fallen behind in terms of advancement in manufacturing technology.
For example, Malaysia's current leading semi-conductor wafer-fabricator, SilTerra Malaysia Sdn Bhd offers major foundry compatible CMOS logic, high-voltage and mixed-signal/RF technologies down to 130 nanometer feature size. SilTerra’s wafer fab has a design capacity of 40,000 eight-inch wafers per month.
In fact, in our DAP's 2008 budget statement, we have stated that the semi-conductor technology has advanced significantly with state-of-the-art 90-nm technology on 300-mm wafers, and 65-nm production. The 45-nm process technology is now under aggressive development.
Our neighbours, Singapore, for example, is attracting more of the ‘first-of-its-kind’ investments such as the chip used in the latest PlayStation3 and Xbox. A French semiconductor company, Soitec, is investing $700 million to set up in Singapore its first offshore facility to make the wafer for this chip in 2007. This advanced technology has wafers with alternating layers of silicon and insulator, unlike conventional wafers which use silicon throughout. Singapore became the only country in Asia that it trusts well enough to set up its first manufacturing campus outside of France.
Khazanah Nasional and the Finance Minister must explain to the parliament on the extraordinary losses incurred to date, the continued viability of Silterra and if viable, what are the critical measures being put in place to ensure that Silterra can be checked out from the "intensive care unit" (ICU).
Do we have what it takes to compete in this particular sector, or would it be more beneficial for Malaysia to lay emphasis and invest in high-technology sectors which it actually possess competitive advantages?
84 comments:
And they will employ a number of malaysians in those operations.
Khazanah is shedding blood with Silterra and Valuecap.
aiya YB, talk english lah ... easier for me to translate to bahasa for the kampung folks :-)
This is one rare time when I don't feel like a fish out of water. Anyway,
When Silterra started, it used a 'copy-exact' method of technology transfer from LSI Logic. However, I believe that it probably licensed its 0.13um process from TSMC as the cost of in-house development of sub-micron processes are extremely expensive (incidentally, Chartered is also at 0.13um).
There is also nothing wrong with using 0.13um as it is still in demand. The major users of cutting-edge submicron technology are the very large chip companies like Intel/AMD/Nvidia but they are a drop in the semiconductor ocean. There are still plenty of other companies that use older technology to produce volume microprocessors and other devices simply because the cost of fabrication and testing of mature and proven technologies is much cheaper. I believe that even 0.35um is also still very much in use.
As part of RM9, our government had identified the chip design area as one of the main focus areas. This is probably because electronics is a major export of our country and the government was probably trying to vertically integrate and increase value by: a) increasing the number of expert workers in the area of design; and b) increasing our manufacturing capabilities in this area - Silterra.
A couple of years ago, Silterra was actually listed as the #10 fab in the world. However, since then, times have changed and the entire electronics industry is hit by hard times. So, I am not surprised that Silterra has suffered huge losses (but actually not so huge by semicon standards though).
Personally, I don't think that closing it down is a good idea simply because fabrication technology is a vital piece of the technology pie. Everyone is trying to get in on the action. Since we are already in, we should not let it go so easily. So, the question should be how to make changes at Silterra in order to make it compete better with the other foundries.
This entire industry is extremely cost sensitive. So, Silterra can improve yields, work *directly* with customers from an early design stage, provide high density quality libraries, integrate well with the tools and process, and anything else that can be done to help their customers reduce the cost of development and fabrication. Maybe it can even consider working with customers without deep pockets. Then, maybe it has the chance to compete.
As for tossing more money into other technology areas, the question is what technology areas. Due to the agricultural friendly attitude of the government in recent years, we have lost a lot of ground in technology. You probably have a better idea of this than i do, being a former CEO of a tech company. I don't think that we are strong in any particular technology area.
It is not surprising. Take a look at their portfolio below and see if you can find other company struggling to make a profit ?
http://www.khazanah.com.my/portfolio.htm#com4
The problem is Khazanah has other agenda besides making money !!
YB TONY, can you give us a rundown on what happened during the PAC, INVESTIGATION of EUROCOPTER,
A)Were the competing companies called in to give their take on the tender process?
B) was there a middleman company, if there was why?
C)wHAT IS THE CRITERIA AND S.O.P. for choosing Eurocopter without testing and checking out its back up facilities.
d) why was the Couger selected when it is an up graded model, from a thirty year design.
THERE ARE A LOT MORE WHY? but the most important Why is how could such an investigation be conducted in such a tidak apa fast track atitude when there should have been a through investigation with the calling of the tecnical teams.
WAS THERE A COVER UP IN THE FORM OF NOT ASKING THE RELEVANT QUESTIONS?
SILTERRA can't make money. Actual and info at website didn't match. Cost of producing wafer higher compared to other foundries.
YB Tony Phua,
Please check in details. Heard management changed few times but revenues and profit still didn't improve. Many mistakes since start-up. My friend working as vendor there told me monthly capacity only 30k not 40k in website. ?? Heard working life there is very easy. No stress. No pressure. Like goverment servant but many high pay peoples. Many expat work didn't want to leave. Pay is good and work is less.
Silterra should sell to other foundry like 1st silicon in Sarawak.
What Silterra is involving in is a very technological competitive business. The top 3 foundry are TSMC & UMC of Taiwanese and SMIC(China) & Chartered (Spore) competing for 3rd spot. If u dig deeper about SMIC & Chartered, both of them are actually not making profit since startup as well. Chartered is also heavily supported by GIC Temasek of Spore. There is a rumour flying that Temasek is asking TSMC buying over Chartered..
The problem of Silterra is they started of at a very bad time on year 2000 & follow by 911 2001. The huge investment on semi con equipment at that wrong time really incurred a big losses. Why I know all this, bcos I am Silterra employee since Y2000.
Yet another BN project to siphon off tax payers money......Got ballslike the THais or not????.....Malaysians love to be sodomized........they just cant get enough....so why complain.....
Throwing in MORE money a lost cause. Even Temasek's CSM are losing their pants competing with TSMC and UMC, what chance does Sil... have? It is a CUT-throat, capital-intensive and real cutting-edge industry that M'sian taxpayers cannot afford to compete in...
M.B. KHALID, (and all the pakatan M.B.s and C.M. TO their own civil servants)
HAS TO MAKE A STATEMENT and a directiveto all civil servants and also , TO THE PKNS STAFF, PKNS WORKS TO THE SELANGOR STATE GOVT AGENDA, not some mumbo jumbo 'agenda ketuanan melayu umno. ' the new slogan for the pakatan states to the state civil servants should read, 'WORK WITH US or GO WORK SOMEWHERE ELSE' this will be an indirect slap to that other guy who came out with 'WORK WITH ME' SLOGAN. This should be the ultimation to the 'BIADAP' culture of our biadap civil servants.
What happen on the PAC observations on the Eurocopter procurement.
According to your chairman everything is in order. Let me ask you the following,
1. If it is in order why did they do away with the physical evaluation? Any explanation was only an after thought as a cover up.
2. How much the ceiling budget allocated. Suspected breached of budget secrecy that allow Eurocopter to come out at a comfortable quotation. Again an after thought out of the hue and cry by the opposition.
3. Basis of the price quoted?
4. Did the committee scrutinize the specification requirement. Any explanation given.
5. Military purchase? But still we are buying a basic helicopter. What speciality accorded to SAR, combat operations and utility-3 in one concept, ridiculous-sound big but beyod imagination.
6. What is wrong with present NURIs. All the crashes to justify new chopper? The truth is, the investigation conducted for all the crashes are dubious. As the recent crash at Genting Sempah, no comprehensive technical investigation conducted as the crashed helicopter was abandoned at the crash site, so what kind of technical investigation did the RMAF carried out.
The way it went on the PAC inquiry can be summed up that you guys were out maneuvered by the team from Defense MInistry. Too many things were left out, even the chairman are very convince of retiring the Nuris not knowing the full background of the helicopter. All explanation given by the the RMAF were an after thought to avoid someone from being hanged.Can you make public of the full PAC inquiry for public viewing and comments.
Problem of Silterra is not they started at a very bad time. It is just have too many employees not productive. Their work culture is same as government servant. Too sad to hear from my friend...
Silterra follow Chartered Semiconductor way of managing fab in start up. So, both losing money. Only small group of employees and vendors benefit. Fab require highly disipline people. Too sad to hear that Silterra employee just work as govt servant. This is what people know about Silterra.
Excuses not acceptable at all. Bad time and tech business are all nonsense.
Fail means fail. Don't find excuses.
Wasting taxpayer money only to keep maintain a company that can't make profit. 27 million lose and 10 win.
the comments here are true. Ask any vendor or employee of silterra (malaysians) and not the expats and they will tell you that silterra has been bleeding since 2001 march when it started production. It had an american CEO followed by Ahmad Pardas the CEO of UEM now. Then another mat salleh and then a malaysian based in singapore! So funny ceo in singapore and factory in kulim! Why cos he is the Chairman's kawan!
Imagine all those CEO's and all of them gave the same cock and bull story to khazanah since 1997. Silterra bought 0.25 and 0.18 micron technology from USA but it didnt work as it was not foundry compatiable. Then Ahmad Pardas went to belgium and got 0.13 micron which also didnt work for customers so more rework was needed means more money spent!
Today 30,000 wafers capacity at Kulim and still wafer prices are going cheaply as they cannot meet customers specs so they sell at pasar malam price.
expats get paid really huge salaries including those in silterra USA office and taiwan. We malaysians at silterra are sick and many locals have resigned out of frustrations. Evan the HR department had a singaporean head (salary around RM70K a month)who didnt know any local laws and local practise.
The singapore based CEO started a company with himself and the Silterra Chairman his kawan as a shareholder and their cronies who are the chairman's personal assistants and silterra employees as shareholders. then they charge silterra US50 per wafer for inspection and bill silterra for work done in silterra by silterra employees! It is a con game that shocked us local employees! That company still today charge silterra and make profits for the chairman, ceo and their cronies employees. All these was in the newspapers when the company went public listed with sleepy khazanah being the yes man...haiyo open your eyes lah khazanah and see how the wayang game worked in the fab! Only now they found out that the ceo was a con and they sacked him last month but so much money lost already. but chairman still free..
Tony,go ask any silterra malaysian employee of how bad the story is and u will be shocked!
It is time to have a new set of thinking.
First, our oil reserve will be run out in 20 years, we need someone who can lead the nation forward with limited resource, someone likes Mr. Lee Kuan Yew. So, we need to make mental preparation for a Chinese malaysian to become the Prime Minister in 10 ~ 15 years from now.
Second, we need to have courage to forge integration, it is important to combine Chinese wisdom, Muslim value and Western management skills. For a starting point, lets try:
Metal : Shahada : Vision
Fire : Salar : Consistency
Wood : Zakat : Hard Working
Earth : Siyam : Core Competency
Water : Haji : Strategic Alliance
Third, we are starting to create a warefare state and pour huge resources to create a social safety net. This is going to limit the productivity input of the government spending. As a result, we need a vibrant private sector to take the lead. It is not a matter of size but the intangible effect of creative spark.
In Khazanah's portfolio there is investment in Pantai. Recently they also added in investment in Parkway (but not listed in Khazanah website)
You do some investigative research, look at the pricing of acquistion, there could be some news for DAP:)
Don't need to wait BN's MP macam Chua Tee Yong to raise it, surely DAP is competent enough to do this alone.
The BN Govt loses money in every business deal it gets involved in. Clearly this HP6 bunch have no business going into business and in many cases in direct competition with the private sector.
They have to understand that the money they lose is taxpayers' money.
They should concentrate on government, supporting & developing private enterprise and collecting taxes.
dear 2:55AM,
I don't how much of what you've wrote is true. But I can confirm this is not true :-
"Only now they found out that the ceo was a con and they sacked him last month .........."
The Singapore-based CHairman's kawan is still the CEO - don't think he's fired.
Hey, what actions have the DAP taken to stop them from putting their dirty hands into our Simpanan Hari Tua? Talk is cheap, do something. Can't we stop the Board of EPF from giving out the money to some non-perfoming GLCs, we know they always lose money, maybe even on purpose! Very, very fed up, since we voted so many DAP people in, DO SOMETHING!!!
donplayplay
Yes, he's still the CEO but he is on leave since Sept 24th, till end of the year( contract expire), .
It is not true that Silterra employee work like civil servant. We are no diff from other company, we have good, bad, lazy and hardworking people. The work in fab is high tension & always on tight schedule basis. Any bad decision made will result losses of thousand or million $$$. The one advantage that Spore has is they are able to hire or fire low cost & best machine operator from India or China whereas Silterra have to settle with Form 5 school leaver from our not that good education system.
Quote, "expats get paid really huge salaries including those in silterra USA office and taiwan. We malaysians at silterra are sick and many locals have resigned out of frustrations. Evan the HR department had a singaporean head (salary around RM70K a month)who didnt know any local laws and local practise."
I'm an ex-Silterrian and currently working in Singapore! What this blogger said about the HR Head is absolutely bullshit because I've worked with him! He has a team of HR experts to offer advice. To say that he does not know the local laws and practices is unfair. Go ask his HR team and other employees about his success in Silterra. During the time when I was there, he hired many talents globally into Silterra and also helped terminate many under-performers, both locals and expats. He was colour-blind. Look at Chartered. They have a Malaysian (SIN PR) as the VP of HR and probably paid higher than RM70K per month. What's wrong with that? Grow up!
As for the rest of the organizational issues, I blame it squarely on the Silterra Board and Khazanah for Silterra's situation. They just had no strategic direction and guts to play the investment game harder just like Chartered in Singapore, TSMC and UMC in Taiwan and SMIC in Shanghai. Wafer foundry is capital intensive. When there were opportunitites in the past for a merger/acquisition with one of the top 4 foundries, the Board and management in the past rejected the offers. We had a chance to be profitable but...
Talk is cheap....
You bunch of negative guys are the real trouble makers....
I have been working in Silterra for many years. This is the only Management that is able to bring business to fill the fab for the past 1 year for the last 10 years....
Silterra hardly terminate any under-performers since year 2000. Many already promoted even not perform at all. Well, this is GLC.
If compare to Singapore, Taiwan and China foundries, Silterra employees are very not productive. After so many years, still wasting money to get vendors to work on and own employees sitting and surfing internet. Weekend and at night, many sleeping instead of working.
Hi All,
First of all, good news that RPK has been freed. Hooray!
Now back to this Silterra that nobody notice since 1994!! While I respect people out there of their rights to free speech, but pls at least make an effort to make a well researched and fair comment.
After reading through all the comments above, I have this to say to the best of my knowledge about Silterra.
Silterra started of as Wafer Tech many years ago. It is a strategic investment meant to move M'sia upstream in semiconductor business. Silterra started of with a relationship with VLSI Tech in US but that relationship was short lived. Then next partnership was with LSI Logic. Silterra 0.25um was bought from LSI Logic. Silterra acquired 0.18um tech from LSI too, but it was not foundry compatible process. Silterra had to redevelop 0.18um. Later 0.13 was develop with the IMEC Belgium relationship. Now Silterra is pursuing 90nm besides having 0.16 & 0.15um. The jewel of the company now lies in high voltage devices. Yes all this meant money was spent. Big money. But because of Silterra, Kulim now have Infineon and First Solar. There are other wafer fab facilities built in other parts of M'sia since then. So how do you value these FDI versus the loss at Silterra.
From what we know in new fab business, RM8.5 billion is definitely over priced for merger excercise or buying over another fab. But that is about the price to pay for a 12 inch fab. Either way, it is not about how much was spent. Semiconductor business is capital intensive.
Regarding competiveness, other major foundries like TSMC, UMC and Chartered is reporting low utilization whilst somehow Silterra is still fully booked. Unique indeed.
Yes, Silterra had a few management change. Back to the cost of building and maintaining Silterra. It cost money. But I think the main focus here is the wastages. Silterra is a GLC. GLCs in M'sia is notorious for the "bocor" issue. That's what Pakatan has been right in pointing out to us M'sians. How much money was put to good use in Silterra? How much money was unethically taken away by greedy management? It is not how much was put into Silterra.
Expat is important. They bring with them knowledge. But how many expat do we need? After 8 years of operation, Silterra should be needing only a few expat to lead.
Working life in Silterra is no fun. Of course there are a few who are not the norm, take things easy. But have you work in Silterra to make that judgement? Engineers who are in Operation in Silterra works only one shift. It's called 7X24. You are given a SIM card and expected to accept calls anytime. You are expected to get the job done yesterday. Engineers start work at 8 am and finishes at 4 am the next day, going home to sleep and by 1pm is back working!
Between the deserving workers in Silterra and the Board of Directors in Khazanah, there has always been foreign management that had ulterior motives. We had people carting away the money right under Khazanah's nose since Day 1 and still have!!
Many issues need to be resolve and having people who deem Malaysia as "tanah tumpah darahku" as the management is one of the needed approach.......
The fundamental problem with the wafer fabrication industry in Malaysia is that, the electronic / electrical industry in Malaysia doesn't get involve in Product Design and Development.. For example,foreign MNCs do not design TVs, Hi-Fi Stereos, Mobilephones, DVD players, MP3 players, etc-etc..
Even though when these companies shifted their manufacturing line to China, they will be using ICs designed by Malaysian IC design companies and fabricated by Silterra.
Without the Product Development Industry, how are you going to develope the necessary volume to sustain a wafer fab? or even worse, how are your fabless IC design companies develop the credibility so that foreign MNCs in China will use their solutions? What will happen if the fabless IC design company closes down after a few years if a foreign MNC uses its solution in its product designs? Wouldn't it means that the MNC would have to waste more time and money to redesign their products?
There is a whole value chain that is missing in Malaysia.. That is the problem with policy planners in Malaysia.. Most of them have NO experience or incomplete experience in understanding the whole value chain of the electronic industry. I have so often heard of them saying about, "Leap frogging".. My foot!! They should learn to walk first before attempting to run..
Yes.. I doubted the sustainability of Silterra and other wafer fabs in Malaysia.
Wafer Fabs in Malaysia uses old or second hand technologies which they bought from other companies. Compared to Singapore where the Singapore Government invests a lot of money in Wafer Fab Technologies R&D activities, which allows wafer fabs there to be at the leading edge and thus become more profitable, Malaysian Government does not do the same thing. As a result, wafer fabs are using older technologies which produce chips that are not of a higher market value compared to newer Fabs. That explains the massive reinvestments that Silterra needs from the Government to keep it alive!
Wafer Fabrications is a cut throat business and as you can see from Fabs in Singapore and Taiwan, the profit is low and is highly sensitive to the global electronic cycle.
Good technology Company.
Mismanaged by the Top Management. Too much trust to expatriates,
Khazanah, open up your eyes..look whats happening, look into detail, get to understand where the money goes. do not trust these people 100%. These are Billions of Rakyat's money.
Paying 70K? permonth for a Singaporean VP HR is rediculous!!.No more local Malaysian to do HR job for such pay? is it worth?.Heard he was unemployed when hired?
Do you know for sure that the HR VP was paid RM70K and he was unemployed before he came to Silterra? Guys, if we are unsure of the facts, don't speculate. Ask the majority of the Silterrians who the current HR Head is. He may be a Malaysian and paid less but he is hopeless. Only know how to wayang and fight for the cause of bumis.
By the way guys/gals, the Singaporean HR VP gossips that you fighting is "SHE"; not "HE". Get your facts right.
Guys and all,
The Singaporean HR VP is a guy, he was unemployed at the time he was hired in 2005 Q1. Before silterra, he was "released' by Charterd, then he went to TSMC and also "released"..
He joined silterra on a 3 year contract that was worth 7 digits salary package.
There are many many more expats horror story with monster salaries. Many ex expats are also suing/sued silterra due to bad employment contracts so now we have to pay them some money after they have left!
The poor management of the company is due to the Chairman, the board members and khazanah.. BTW the current CEO has been asked to leave silterra but he is on forced leave until end of 2008 - on full pay of course..
Dunno want to cry or laugh lah..
Wow, I admire your vain effort but also moan your stupidity. So little you know and comprehend about what has happened in Silterra, you actually created a soap opera out of them! Maybe you should be scriptwriter.
It seems our 7.44pm person is emotional and anonymous of 2.27am must have hit a raw nerve for this person to react in a very childish manner. Well done 2.27am! U must be right then!
Obviously this 7.44pm person must be one of the expats who are mentioned throughout this blog on Silterra.
Let us not have such crude half wit response like 7.44pm has done. This site is not a court of law so leave your sarcasm out buster!
Come on you local Silterra people, speak up so as no more RM Billions of our tax money is wasted on underserving expats who come here for a paid holiday and then make money on the side thru unscrupulous vendors.
Let the truth be heard and do not be intimidated by people like 7.44pm who obviously are the guilty ones.
Thank you YB for allowing this discussion.
I would suggest to let the ACA to go in and do the investigation and make all transparent rather than all the slaying and stabbing on the blog. Lets dig out the worms out from the can. Sooner or later you will see another case of Pewaja Steel in the headlines of the papers!
Dear YB, could you bring this up again in Parliment to avoid the outflow of more millions of the rakyat's money. This certainly needs high alert!
If you want to make disparaging remarks about the expats community and ex-employees, you must be prepared for a response. Looks like you are not prepared to listen for your own good. It's not raw nerve that you thought you struck, it's malicious lies that you have spread in your blog. You actually know nothing and created a story designed to incite racial hatred towards expats (both past and present). This issue is never about expats. It's about the inaction of the investors because they don't know the business at Silterra that has caused the taxpayers so much money to keep this wafer foundry business alive.
You know Silterra, the last two years under the new china man CEO and his chinamen team really went to the drain drying up government coffer and planned to drain more thru 300mm tools installation. This is a serious big mistake by Khazanah appointing the businessman with ulterior motive, no thanks to his buddy pro-singapore chairman. How could the board allow such a thing to happen, ie to outsource the design/design library/IP/etc to the company owned by the very people who manage Silterra? So much talk about arms length transaction... Bullll... How could this design house owned by the management get the 'pasar malam' foundry price from Silterra? Have you guys thought about that? How they bull MIDA in getting USDxxmillion R&D fund for 0.13um research done by Imec? Open your eyes man... Silterra management should look into changing biz model. Of course you can't compete on foundry model. TSMC and UMC excels because their top notch process technology. Chartered of Singapore Failed! SMIC will catch up. X-Fab excels due to restricted Europe market, But Silterra? Of course you can't compete on Foundry model. You should look into IDM model. Go get partnership with real honest design houses and go Analog man... You will be niche in that market at your 0.16um, 0.18um, 0.25um technology. 0.13um? Get the real CEO who knows this biz well and who has national interest. You will find many in KL. They have a good Fab in KL you know
-Bumi obeserver-
IMO, it's too late to change now from a pure play foundry to a IDM. There's no use in sustaining Silterra anymore. Best is to sell it to the highest bidder. BTW, like the previous "9.48am" blogger said, let's not get racist (referring to CEO as China man, etc, etc) since M'sia is a multi-racial and religious society (by the way, including expats). What's done can't be undone. I heard from a reliable source that when the previous ang moh CEO retired, the Board didn't even do a proper interview to search for the CEO despite a proper search being carried out. Silterra Board already decided who they wanted as CEO.
There are few ways Khazanah could deal with Silterra's future. Khazanah just couldn't put Silterra up for sale. It is too strategic to let go completely. We should acknowledge the role the Malaysian Fabs played in bringing in semiconductor front-end investment into the country from MNC companies. We just couldn't depend on MNCs' assembly and test houses to bring in foreign exchange. That labor intensive industry period is almost over. The emphasis now should be to create as many product companies in the country. Khazanah should look into this. We should have selective FDIs in front-end like IC Design/Fab/Solar cell.
The ultimate goal is to have Malaysian product companies covering full spectrum from design concept to marketing. To achieve this, Silterra should slowly being converted from pure play foundry to become 'foundry lite' or rather 'IDM lite'. Open it for equity stake from other parties who can turn it around. Now is the best time before Silterra's valuation drop further. It should be given to product company who has interest to grow technology indigenously. It could possibly take another 3-5 years before being a full IDM but it is worth a try for Khazanah for the good of the country. Selling Silterra completely is not a good idea. The buyer could have Process tools relocated. Jobs will be lost. However, it is most important for cost cutting measure. There are many ways; your materials, outsourcing cost, gas, chemicals, salary, etc. Should look for CEO beyond personal gain. Many honest good Bumis with rich Fab experience in KL.
-Bumi observer-
semicon is a tough biz to be in...only couple of gaints earn $$ in both upturn & downturns...intel for IDM, Samsung for DRAM/NAND/NOR & TSMC for foundry...
silterra is in a tough situation..as above, only TSMC is earning, UMC & CHRT is struggling..as for SMIC, it is in very very bad shape...
however bad it sounds...to compete seriously in this arena, silterra will need the RM8b to go into Copper, sub 90nm design rule & build 300mm fab...
Silterra is too small to compete. Hence there is pricing pressure from customers to offer capacity at heavily discounted price. Meantime, costs of raw materials, equipment and people remain high. Silterra has almost 10 years to make it good but it hasn't because none of the investors know the business intimate enough to appreciate why we need to spend to get more top-line revenue in. Silterra has no hope in leapfrogging any wafer foundry if it continues to be a single 8" fab with only 0.13um Cu capability. Stop the bleeding and sell the business away. Focus on being the region's best solar manufacturing and R&D.
It is a foolish idea to spend another RM8 BIllion on another experiment in silterra. Silterra was a an experiment that went wromg and allowed to bleed beyond its self life becos nobody knew what to do with it.
The weak Board,unscruplous CEOs and chairman and some management members who took the opportunity to enrich themselves are all to be blamed.
Let the government not spend another RM8 Billion just to enrich another group of crooks at the tax payers expense. Khazanah should sell/merge or sell down its stake to 30% and allow the new group to invest and run management control 100%. Do not put in new money to please/as sweetner to the new buyer. tally your investment todate, put a value to it at today's prices, and bring it to the table. Negotiate aggresively and for God sake dont use any of your internal or silterra's officers! We have all seen what a screw up bunch those people are over the last 10 years thru countless merger, partners, investor meetings round the world that has only resulted in Millions of RM lost thru 1st class airfare travels, hotels, entertainment for the CEO, chairman, board members, officers of both khazanah and silterra on these paid holidays!
get out now before heads roll at parliment or worse at Khazanah...
It is extremely hard to fight TSMC and UMC. It got to have the expertise, technology, and man power to achieve. Too bad Malaysia has none of those.
There were many opportunities in the past to sell to bigger competitors but the shareholders didn't want to do it. There was an opportunity to be a feeder fab to one of the big 4 but it didn't happen.
Today's price for Silterra is probably in the region of US$ 180m to US$ 210m. There's no need to negotiate aggressively as recommended by the blogger in "11.46pm" because this is probably the benchmarked value for a single 8" fab earmarked when CSM bought HNS with some discount now (recession) in 2007.
Silterra has larger capacity and latest tech than HNS. It should get higher offer.
Silterra interested to buy HNS but failed. Chartered managed to buy. Lucky didn't buy,else financial for Silterra become worse now.
Silterra only buys the technologies from other companies and which company in the world is stupid enough to sell you their latest and most profitable technologies to you? That would make you their competitors! As a result, Silterra will only get "OLD" second hand technologies and thus produces chips that are not that valuable in the market. That is the problem with the planners back in the 1994. I heard so much about plans like "Leaps and bounds" to achieve 2020 unfortunately, they fail to learn how to walk before they run..
Silterra business is good now compare to other foundries. Revenues is ok but profit ???
I may be late in this discussion but Mr. Tony should also look into MIMOS fab. There also they are throwing RM30Million a year for many years. The Fab. is small old 0.35u and no way it can make money. MIMOS CEO still looking for his friends to give this Fab as a gift before he leave.
Silterra is commercial wafer foundry. MIMOS is R&D wafer fab. Business model totally different.
Silterra official opened by Mahathir back in 2001. Plan is very big, 5 fabs in 8 years. But now only 1 fab with 30k capacity.
If MIMOS is a R&D Fab, show what kind of R&D it has done sofar. It is 0.5u fab, commercial process, not even any high end. All Chinese Fabs are doing this kind of Processes. Time is running out.
As for Business Model, Govt. Decided to divest and so far nothing as CEO always looking for friends. Who want to take a negative Business.?
1st Silicon already sold to X-fab. When is Silterra going to sell? Both fabs start-up about same time back in 2000.
There are lots of wastages in govt's socalled investment. At least Silterra is a commercial fab with real revenues but MIMOS??? A R&D lagging technology fab that is not revenue generating and every year get huge budgets from the govt to fund its lagging technology research projects. Heard of the failed RFID?
Silterra revenues less than losses that made. If not GLC, it already closed. Silterra has advanced equipment and system but not managed well over the year. It rely too much on expat. This make local not happy with it.
Its easy to blame Expats. Thats not the whole picture. In the Business that Silterra is in, the competition is stiff prices are going down, Chinese fabs are taking business as well. When you run a fab to almost full capacity and don't make money that shows the business model is wrong. Removing Expat will not do much as that may not accounts to no more then 10% of the cost. Going forward silterra fab is single line, long cycle time and as such not feasible for high volume foundry business. Same as MIMOS fab. MIMOS fab is very small, can't do any R &D for 0.5u process. Both Fabs need new vision and Business Model that cater to the need of the country and the reality,Not the need of the Management like in case of MIMOS. Throwing RM30M a year on MIMOS fabs is insane, just that CEO of MIMOS can't make up his mind until he find one of his friend to take advantage of the fab.
Kawan (12.37am), So what with or without expats. MIMOS are without expats and Federal 100% support lagging R&D activities! So MIMOS can waste government money is it?
Anonymous (3.31pm) either expat working in silterra or benefit as crony of expat. Silterra can't compare with MIMOS. Silterra started as commercial foundry. TO MAKE MONEY not WASTE MONEY.
Why rely on expat? Most of top managment are expat till now. I have experience working with expat. They just interested to secure their working contract. So, they will make sure no local capable to take over their job. Either they are american, korean, taiwanese, indian. All are same. Those are good already left Silterra. Only those that not 'market' value that other foundry didn't want stay.
There are a lot of expat in Silterra compared to other semiconductor company after 8 years of operation. Correct me if I am wrong. Manpower cost at Silterra is higher mainly due to expat expenses. Now, all fab talking of cost reduction. If Silterra produce 30k per month and cost per wafer is USD500. Then expat expenses are more than USD 1 million. How to cut cost? Cut local pay which is 5 or 10x lower than them? Most of local get only RM2-3k per month.
Hello (7.24pm), I am no expat, not working in Silterra and 100% not a crony. Just want to be fair. Does not mean that without expats, money cannot be wasted like MIMOS. Then attract back the M'sians working in CSM lah...but will anyone return? Singapore is a far better place to earn money and raise families.
All are missing one point. A Band Aid approach will only good for short term. Lets say all expats are gone and Silterra breakeven in best case scenario. With the sharp down turn (Tower, Chartered, Jazz, all foundries are suffering huge drop in business), Silterra have to struggle again so all goes back to square one. Same true for MIMOS Fab. A new business Model has to crafted for long run. Remember, downturn is a blessing sometimes as you have time to set up right goals. I still believe, the right parameters for both Fabs should be: Set up the core for one or more Real Malaysian semiconductor company that rivals others not just the Design house. Also, one that just use no more then 60% capacity and break even. With that, Malaysia can do better -- only if the Management of both Fabs don't look at their interest but the interest of the country.
Hello (1:03AM), I beg to differ. MIMOS is an expample, so much money has been wasted by the current Management but no one says anything because Workers are happy to get paid and no pressure. In the end all is Good. YB Tony, you should raise the issue of MIMOS Fab. in the Parliament, as why RM30M is thrown on a Fab without any R&D or utilization. I heard now CEO is running around to find someone who is can give away the fab. before he leave the office just like he did with the Computer group. The MIMOS Mangement (Penang Gang )is making a mockery of the system before current PM leave.
But local pay is much lower than expat whether locally hired or from Singapore. Yet Expat relax only. Typically they come in one group. After one group left, another group join. From american, indian, taiwanese.
Current management not interested to attract local that work in overseas. They prefer their friends from same nationality.
Again, we are focusing on one part of the problem. Expats always comes as team. But look at MIMOS, the current Management came as whole group from Motorola, none are Expats. So what you say to that?
Made losses and yet can pay out bonuses of 6 months last year n this year????
You mean MIMOS employees got 6 months bonus in 2007 and 2008? If it's true, it's ridiculous!
dear all :
actually silterra management is working very hard to make the company success and the workers are working very hard to keep the company self sufficient. more over this fab is a strategic investment from malaysian government.
i hope YB tony phua and other blogger pls don't simply write and talk if u don't know the big pictures. Khazanah knows what they are doing. pls let them do their job.
YB Tony phua, pls spend more time on service your constituency and work on something more constructive and creative.
Silterra employee.
Silterra employee, every Malaysian has right to know details of Silterra losses.
dear anonymous 11:31pm who said every malaysian has the right to know details of silterra loss.
i think u are busy body. are u working now ? why don't u go and find out about your company situation first ?
that is the problems with malaysian public nowadays. kepo. u are a civilian and your responsibility is to perform in your work place. after u have select your government. leave the thing to the parliment...
why kepo. wasting your time. must well spend your time with your familiy and strengthen your family first.
go and read the chinese confucious literature..before a country is strong, the unit family need to be strong....
silterra empolyee.
dear anonymous 11:31pm.
Ya. when every malaysian think like that...there goes our KEPO culture...
why don't u take care of your own business.go and find out your company financial standing and announce it to your company employee...every malaysian should know right ?
do u know that when u pay taxes, the government use it to build health care system to treat your father/mother and yourself when u are old...?
u are really kepo. all blogger kepo by writing destructive comments.really useless.
i think nowadays people are so free and kepo once the DAP write some sensitive thing for people to debate rather than do consructive thing like raising fund and money to do something constructive. the only difference between government and opposition in malaysia is government control petronas money..opposition can only critice and shouting...
silterra employee
Silterra employee, i think you are abuse company resources to surf internet and post comment in blog during office hour. Now I know reason Silterra can't make money. Talk more than work.
Hi anonymous 11:10 pm,
I have to disagree with you on your remark 'Now I know reason Silterra can't make money. Talk more than work.' I am an ex-SilTerra process engineer for 5 years. I was shocked when I first join the company, we sit very near each other in the cube but rarely talk to each other, only looking at data at PC or attending calls from the manufacturing line, always pushing for tool release to production due to production lots waiting. Time means money. Issues that arise have to be addressed immediately. It is a 24 hour business, non stop.The wafers have queue time at certain process step,and it cannot wait. Every hour counts. Everything is urgent. Idle time is not compromised. It was normal to me as a process owner,to be awoken in middle of night by a call at 3 am, need to think and make a decision which I have to answer and be responsible for in the meeting next day at 8 am. Is your job like that? Each 25 wafers per lot you can by a Proton Perdana, your single decision may cost at least that. I don't call that fun.This happens on daily basis.Continuous follow up.The spec limits for the product are very tight down to the micro meter or angstrom level. Cannot have particle >0.5 micron size. Very challenging. I normally go back at 9-10 pm, most of the time not claiming OT. Just for the sake of completing the work, was my responsibility. There are a few guys like me that over work. But most people go back at 6-7pm despite the actual 5pm end time. Rarely I do not work 'on the phone' at home including weekends.Can count the days with my fingers I am not called with bad news requiring my advice.
The pay may be high, but the stress I feel is higher. You can check how many employees have resigned due to the stress, what is the turnover rate. So please take back your comment 'Now I know reason Silterra can't make money. Talk more than work.' You need to work in a asian fab to know it.
Ex SilTerra employee (2002-2007)
Great comments by 8.59pm anonymous. This shows that people like 11.10pm anonymous pretend to know foundry manufacturing when they have zero knowledge. They are divisive and not inclusive. These are people whose only preoccupation is to stir shit - criticizing and generalizing Silterra employees - locals and expats, etc.
Any one knows what is going o with MIMOS fab? The Penang gang is working behind the doors to get their contract renewed before new PM take over. Its great injustice to the resources of Malaysia. If they deserve it they should show the progress. Loosing Money is the MOTTO of MIMOS looks like and noone is looking.
dear anonymous 9:42pm.
pls dont bring in MIMOS. we will continue to talk about silterra.
due to tony phua, now silterra have no CEO and the COO just left... change of management again...so far american /malaysian can't turn the company around...
Gambattte all Silterrean. although i already left the company but my soul is still with all of u.
make malaysian proud.
EX-Silterra employee.
Why not MIMOS, is MIMOS is not Malaysian Fab. Is it not the Govt. Money. How we can let Malaysian money get wasted by the people who have just personnel agenda.
As long as the rein is in the hand of incompetent nothing will happen.
MIMOS is currently talking to Silterra for a merger of its manufacturing facility and capability. Silterra would probably be looking at asking the government to divert the funding for MIMOS fab to Silterra to boost cash flow.
MIMOS is playing game with the Govt. They want to keep getting Fab Allocated RM30M with no accountability. They are loosing money and the incompetent people running the Fab now are trying to convert that to R & D so that no one can ask why it is not making money. What R & D they can do with 0.35u Fab is beyound anything. I heard about Nano and they even don't know what is that? Its time someone ask the CEO and the cronies running the Fab to come out clean and don't play with the Money and future of the employees.
breaking news :
The government will answer the question by tony phua tomorrow afternoon in the parliment.
insider info confirmed silterra 2008 financial is good...and outlook for 2009 is good also due to china/taiwan big customer loading..of course, the wafer price is low....can't make huge profit. but to survive the storm....
tony phua will have to silent off because silterra is making money..
syabas silterra.
11-feb-2009 : 8:29pm ex silterra employee.
"Making money"...Really? It's not even remotely EBITDA positive for so many years! It has insufficient cash to be self sufficient. Many good people who is passionate about Silterra have left - COO/President, CFO, VP HR, etc - Silterra has no more future. Just let it die naturally from competition. Don't waste time with Silterra anymore.
There is also nothing wrong with using 0.13um as it is still in demand. The major users of cutting-edge submicron technology are the very large chip companies like Intel/AMD/Nvidia but they are a drop in the semiconductor ocean. There are still plenty of other companies that use older technology to produce volume microprocessors and other devices simply because the cost of fabrication and testing of mature and proven technologies is much cheaper. I believe that even 0.35um is also still very much in use.
to all commentor..just come and work at silterra..
silterra workers
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