KUALA LUMPUR: Two of the leading homegrown high technology companies, Mimos Bhd and SilTerra Malaysia Sdn Bhd, entered into a smart partnership on Monday to produce power management integrated circuit (PowerMos) wafers for SilTerra’s global market. Deputy International Trade and Industry Minister Datuk Mukhriz Mahathir called it “a new beginning where Malaysian-owned companies form smart partnerships to help achieve the government’s desire for high knowledge-intensive collaborations which ultimately lead to boosting the nation’s competitiveness.”

PowerMos wafers are critical in an ever more connected world where digital devices are constantly connected to the Internet or mobile networks to source for information. PowerMos wafers help improve the power efficiency of digital devices.

Unknown to Malaysians, SilTerra, is already one of the top 20 foundries in the world in terms of revenue. A 2010 Gartner report on the top foundries in the world by revenue had SilTerra at the 17th spot with US$180 million (RM543.6 million). The 2011 report is still being finalised. A key driver of this revenue comes from display drivers where SilTerra has captured an estimated 21% of the global market for display drivers. According to SilTerra CEO Dr Kamarulzaman Mohamed Zin, this figure is based on Silterra’s customer estimates. Display drivers are chips that run the screens of smartphones and tablets and are appearing in an increasing number of other consumer digital devices. Gartner predicts that smartphone sales will triple to 492 million units by 2012 from 139 million in 2008. The computer market will expand to 443 million units from 290 million over the same period.

Kamarulzaman said SilTerra has been developing PowerMos technologies for a while but has not had the production capacity in meaningful volumes to produce the wafers in-house.

(From left) Kamarulzaman, Mida deputy director-general Datuk Azman Mahmud, Mukhriz and Abdul Aziz at the signing of a smart partnership between SilTerra and Mimos.

“We have been running our fab at full or near to full capacity [40,000 wafers a month] for the past three years with customer orders and have been exploring several fabs around the region, including in China and Japan for us to tranfer our process technology and get the PowerMos wafers produced,” said Kamarulzaman, adding that he is happy to do it with Mimos, both for logistical reasons and economic ones.

He described this strategy of using a second party’s production facilities as “asset-light” model which saves SilTerra hundreds of millions in capex versus expanding its own manufacturing. A Taiwanese semiconductor online publication has also reported that SilTerra has tied up with a Taiwanese DRAM foundry, ProMos, to utilise its manufacturing facilities too.   

Meanwhile, Abd Aziz Kadir, chief operations officer of Mimos, hailed the collaboration as one that will give it a “secret recipe” to make market-relevant products. “We have been focusing on R&D all this while and have top-class equipment that is as good as any world class manufacturing facility in the PowerMos space. Our collaboration with SilTerra helps us meet market demand as they have more process integration engineers who understand customer requirements and translate that to a manufacturing recipe which we will then take and convert into PowerMos wafers.”

SilTerra is saddled with a RM1.8 billion sukuk bond and though it has been running at an Ebidta positive rate for the past three years, its main shareholder, Khazanah Nasional Bhd has been looking at a strategic partner which can take up part of its stake.

This article appeared in The Edge Financial Daily, February 22, 2012.