Global partner boost to SilTerra [Business Times (Malaysia)]
(Business Times (Malaysia) Via Acquire Media NewsEdge) KUALA LUMPUR: SILTERRA Malaysia Sdn Bhd will continue to operate in Malaysia despite 98 per cent-owner Khazanah Nasional Bhd selling a controlling stake in the wafer fabrication company to a Chinese semiconductor giant.
An industry source rubbished speculation that the Kulim-based company would be shut down and its tools and machineries moved elsewhere, saying that the reason a foreign party would be interested in SilTerra is because of its potential to expand.
"SilTerra is a small player in a global market dominated by four or five big players. If it remains status quo, it would not be sustainable without the technology and further capital input.
"If it becomes part of a bigger global player, it would benefit from the latest technology and gain the opportunity to expand further," said the source.
Khazanah, the government's investment arm, is reportedly in the final stages of selling a substantial stake in SilTerra to a giant Chinese semiconductor player.
"The fact that it is a major player in China means that it has the much-needed technology and marketing network to tap. SilTerra, in its present form - although ranked 15th (based on revenue) globally, does not have the economies of scale.
"In this industry, the economies of scale is important as you need to constantly invest in technology," said the source.
SilTerra, despite being positive in earnings before interest, taxes, depreciation and amortisation for the last few years, still requires capital expenditure input from Khazanah.
"In fact, in lean time, even the salary of its workforce has to be paid by Khazanah," said the source.
Nevertherless, because of its strategic value to the country's electrical and electronics sector, SilTerra could not be allowed to fail.
"It cannot remain status quo and be allowed to fall behind the technology curve. It has to move forward, and to do that, it has to either make further investments or find a strategic partner," said the source, adding that Khazanah apparently wants SilTerra to be sustainable in the long run.
To protect the interest of its workforce, the source said Khazanah could easily set a condition that they should be retained for a certain number of years.
It is understood that the Chinese company was proposing to set aside some fund to expand SilTerra's capacity by some 30 per cent.
"The Chinese needed the additional capacity and SilTerra could provide it," said the source.
SilTerra, which has its sole foundry at the Kulim High Tech Park in Kedah, has more than 1,000 employees.
It has spread its wings in the global technology scene and is more well-known in Taiwan and China, and to the giants of the industry worldwide.
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