{"id":39296,"date":"2023-02-09T09:06:43","date_gmt":"2023-02-09T01:06:43","guid":{"rendered":"https:\/\/investpenang.gov.my\/tech-us-china-tensions-open-door-to-simmtechs-diversification-to-malaysia\/"},"modified":"2025-11-28T13:49:59","modified_gmt":"2025-11-28T05:49:59","slug":"tech-us-china-tensions-open-door-to-simmtechs-diversification-to-malaysia","status":"publish","type":"post","link":"https:\/\/investpenang.gov.my\/zh-hans\/tech-us-china-tensions-open-door-to-simmtechs-diversification-to-malaysia\/","title":{"rendered":"Tech: US-China Tensions Open Door to Simmtech\u2019s Diversification to Malaysia"},"content":{"rendered":"

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Tech: US-China Tensions Open Door to Simmtech\u2019s Diversification to Malaysia<\/h1>\n

[\/vc_column_text][vc_separator type=”normal” el_class=”red-separator” color=”#ee4023″ transparency=”1″ thickness=”2″ up=”15″ down=”15″][vc_column_text css=”” el_class=”white-text”]<\/p>\n

8 February 2023<\/p>\n

[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”grid” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” css=”.vc_custom_1703764846254{background-color: #f3f5f8 !important;}” z_index=””][vc_column el_class=”fade-in animate”][vc_empty_space height=”120px” el_class=”height-x120″][vc_row_inner row_type=”row” type=”grid” text_align=”left” css_animation=””][vc_column_inner][vc_single_image image=”30221″ img_size=”full” qode_css_animation=”” el_class=”single-featured-image”][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”60px” el_class=”height-x60″][vc_row_inner row_type=”row” type=”grid” text_align=”left” css_animation=”” el_class=”content-row”][vc_column_inner][vc_column_text]February 8, 2023 \u2013 THE semiconductor industry has been feeling the heat arising from tensions between the US and China, while grappling with worsening consumer demand amid a gloomy global economic outlook. Concerns over the mounting rivalry between the two economic giants prompted South Korea-based Simmtech Holdings Co Ltd to set up shop in Penang, according to Simmtech Southeast Asia managing director Jeffery Chun.<\/p>\n

\u201cIt is a concern, but at the same time, [also] an opportunity. On the one hand, it might impact our China operations. On the other, there is a new opportunity to build a whole new supply chain,\u201d Chun tells The Edge in an interview at the group\u2019s manufacturing plant in Batu Kawan, Penang.<\/p>\n

\u201cIt is a chance for a company like us that has a global manufacturing footprint. There are increasing requirements coming from the major customers\u2019 side on making co-location investments. So, we are really responding to that requirement.<\/p>\n

\u201cOur first response is to set up a factory in Penang. We can foresee there will be many more projects coming in, not only to Malaysia but also to different locations around the world,\u201d Chun adds.<\/p>\n

\"\"

Simmtech is a leading global manufacturer of semiconductor packaging substrate and high-density interconnect printed circuit boards (HDI PCBs). The group also has production facilities in China, South Korea and Japan.<\/p>\n

\u201cThe US has definitely taken a stronger position in responding to the conflict with China. US sanctions are becoming more specific, and are directly related to the semiconductor operation. [The US] has been getting more stringent, and is definitely aiming to slow down Chinese companies looking to develop and catch up with the competition,\u201d he says.<\/p>\n

Despite concerns about growing US-China tensions, Chun says the group has to stay positive and flexible to ride out the storm.<\/p>\n

\u201cWe know we will never go back to the pre-Covid situation, so we will need to adapt to new environments, new orders and new supply chain developments,\u201d he notes.<\/p>\n

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Keep China\u2019s operations running<\/h3>\n

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Nonetheless, Chun stresses that Simmtech will never exit China or scale down operations there as it is a huge market for its products.<\/p>\n

\u201cWe are also interested to learn how our customers will manage their operations in China, so we will work together with them and support the market,\u201d he adds.<\/p>\n

Simmtech\u2019s production capacity in China accounts for 30% of the group\u2019s total PCB capacity and contributes 15% of the group\u2019s total revenue.<\/p>\n

Still, for Simmtech, which is in the semi-conductor business, Chun is hopeful that tensions between the US and China will ease for the benefit of the industry.<\/p>\n

\u201cIn the global supply chain, with China being the big manufacturing house, we hope they (the US and China) will get along well.<\/p>\n

\"\"

\u201cThe US-China trade war does not really affect Simmtech\u2019s operations in China and revenue. But, we do not want this situation to drag on for too long. In the short term, we will benefit from customers exiting China. If, however, the situation does drag [on for] too long, then it will definitely have an impact on the overall industry,\u201d he adds.<\/p>\n

In the face of the US\u2019 technology sanctions against China, which have seen the Biden administration block the sale of advanced chipmaking tools to the latter, Chun says Simmtech will keep an eye on the development. The group, which produces substrates and PCB, is not affected by the sanctions for now as equipment makers are expected to bear the brunt of the ban.<\/p>\n

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Lessons from past tech downturns<\/h3>\n

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Chun says Simmtech has earmarked investments for capacity building to ensure the group can seize opportunities to capture market demand when it rebounds. It is also investing in new equipment to keep up with market trends and the dynamic needs of clients.<\/p>\n

\u201cThere is a huge lesson from the previous downturn before the Covid-19 pandemic. When the market was in a downturn, nobody made any investments. Everybody held on to cash and cut capex [capital expenditure]. So, when the market turned around during Covid, there was not enough capacity to capture the market [demand]. That is the lesson learnt from the previous downturn cycle,\u201d he says.<\/p>\n

Chun further adds that it makes sense to invest when the market slows. This is because during the peak season, the group is usually busy meeting orders and it will be very difficult to make any adjustments to the production line because all the lines will be fully utilised.<\/p>\n

\u201cWhereas when the market slows down, we have lots of room to move around. So even within the existing factories, there are many activities internally for machine maintenance, relocation and upgrade to achieve better efficiencies,\u201d he explains.<\/p>\n

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Aiming for top ranking in memory and non-memory substrates<\/h3>\n

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According to Chun, Simmtech spent around 25% of its revenue on capex and research and development in a bid to grow its market share. The group\u2019s ambition is to be top-ranked in both the memory and non-memory segments (or integrated circuit [IC] substrate) in terms of market share.<\/p>\n

\u201cThat\u2019s how much [investment] is required to stay on top of the line when it comes to competition. Compared to other companies serving the same industry, I am pretty sure we are on the upper to high side in terms of investment,\u201d he says.<\/p>\n

Simmtech produces about 30% of the global market share of memory modules and solid-state drive (SSD) PCBs, making it the world leader in this segment. To put things into perspective, one in every three electronic devices \u2014 be it a laptop, phone or digital camera \u2014 comes with a Simmtech product.<\/p>\n

Meanwhile, in the non-memory segment, Simmtech is ranked among the world\u2019s top 10 key suppliers, in terms of market share.<\/p>\n

 <\/p>\n

Well prepared for industry slowdown<\/h3>\n

Acknowledging the industry will continue to slow down at least within the first half of this year, Chun says Simmtech is \u201cwell prepared for the industry downward cycle\u201d, given its diversified customer base and solid balance sheet. While the memory segment is facing a slowdown, Simmtech hopes to leverage its non-memory segment to cushion the impact.<\/p>\n

\u201cComparing the memory and non-memory markets, as memory has fewer players, it is more volatile, wher as the non-memory is less volatile because there are many players. For example, non-memory has many different sectors \u2014 there are not only consumer products but also analogue, automotive and industrial businesses,\u201d he says.<\/p>\n

In Malaysia, Simmtech has a manufacturing facility in Batu Kawan Industrial Park through its local unit, Sustio Sdn Bhd.<\/p>\n

\u201cFor the Phase 1 project, we just started and have not made much money. We announced that Malaysia\u2019s manufacturing facility represents about 20% of the overall capacity.\u201d<\/p>\n

According to him, the Phase 1 project completed its product qualification in November last year and is set to ramp up production in the following quarters.<\/p>\n

Phase 1, which costs US$120 million (RM512 million), was announced in July 2021. The company hired 1,200 full-time local talents in the fields of engineering, manufacturing and quality management for the 18-acre site.<\/p>\n

The factory will be manufacturing the region\u2019s first packaging substrates for dynamic random-access memory (DRAM)\/NAND memory chips and HDI PCB for memory module\/SSD devices.<\/p>\n

The group announced last month investments of US$50 million for the second phase, bringing its combined investments in Malaysia to US$180 million to date.<\/p>\n

\u201cFor Phase 2 investment, we hope to have a bigger contribution to Simmtech overall. What is more important is we want to continue to grow and expand here and become a more important location for the Simmtech business,\u201d Chun remarks.<\/p>\n

The latest expansion project is expected to be completed by the first quarter of 2023. Upon completion, it will double the HDI PCB production capacity while creating an additional 400 full-time jobs for locals.<\/p>\n

Chun revealed that the name of the local unit, Sustio, is a combination of two words, substrate and studio. Sustio is ultimately owned by Kosdaq-listed Simmtech Holdings, the holding company that mainly focuses on investment activities for the group\u2019s businesses.<\/p>\n

Over the past one year, the counter has lost about 31.2% to close at KRW3,420 on Jan 26, giving the company a market capitalisation of KRW165.36 billion (RM531 million). The stock is currently trading at a price-earnings ratio of 2.5 times.<\/p>\n

Simmtech Holdings also owns a majority stake in Simmtech Co Ltd, which operates the group\u2019s factories in South Korea, China and Japan. Simmtech Co, which is also listed on Kosdaq, has fallen 32.9% over the past one year to settle at KRW30,650 on Jan 26, bringing the company\u2019s market capitalisation to KRW976.33 billion.<\/p>\n

Source: The Edge Markets\u00a0<\/a>[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][vc_empty_space height=”120px” el_class=”height-x120″][\/vc_column][\/vc_row]<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

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09<\/h2>\n
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February \u201823<\/p>\n<\/p><\/div>\n<\/p><\/div>\n","protected":false},"author":5119,"featured_media":30221,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[316],"tags":[],"news_year":[220],"news_month":[200],"local_insights_alphabet":[],"acf":[],"_links":{"self":[{"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/posts\/39296"}],"collection":[{"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/users\/5119"}],"replies":[{"embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/comments?post=39296"}],"version-history":[{"count":2,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/posts\/39296\/revisions"}],"predecessor-version":[{"id":39318,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/posts\/39296\/revisions\/39318"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/media\/30221"}],"wp:attachment":[{"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/media?parent=39296"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/categories?post=39296"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/tags?post=39296"},{"taxonomy":"news_year","embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/news_year?post=39296"},{"taxonomy":"news_month","embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/news_month?post=39296"},{"taxonomy":"local_insights_alphabet","embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/local_insights_alphabet?post=39296"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}