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Author: savemalaysia   |   Latest post: Wed, 13 Nov 2019, 4:52 PM


No major disruptions seen from US-China tech war

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PETALING JAYA: Malaysian semiconductor companies are unlikely to suffer major disruptions to their operations in a worst-case scenario where the whole semi supply chain is divided between the US and China, according to AllianceDBS Research.

“For Inari Amertron Bhd and Globetronics Technology Bhd (GTB), their main sales contributions are largely driven by the US and South Korean smartphone manufacturers, whose key components are either already supplied by, or substitutes are available from non-Chinese suppliers.

“Likewise, we believe Malaysian Pacific Industries Bhd (MPI) and Unisem (M) Bhd have the flexibility to adjust according to their customers’ needs, as both companies have assembly plants in Malaysia and China. Perhaps, the only debatable issue is how Unisem’s key customers (particularly the US and Europe) will view its Chinese ownership structure (59%-owned by Tianshui Huatian) going forward, even though board control and day-to-day operations are still run by the existing Malaysian management,” the research house noted.

Apart from Malaysia, Inari has production facilities in the Philippines as well as China that come with the acquisition of Amertron in 2014.

The two plants in the Philippines mainly deal with optoelectronics, while the plant in Kunshan, China handles LED display and infrared (IR) sensors for Osram. The Kunshan plant has relatively minimal revenue contribution to Inari, thus any potential impact from the trade war would be limited, AllianceDBS said.

The final testing of the radio frequency (RF) chips is done mostly by Inari. Based on disclosure from Broadcom, its RF chips are primarily sold to Samsung and a US smartphone manufacturer. There is none, or very minimal exposure, to Chinese smartphone manufacturers, it said.

Apart from GTB plants which are all located in Malaysia, its main customer for the key sensor division is Austria-based AMS that has advanced manufacturing sites in Singapore.

GTB manufactures light sensors and gesture sensors for AMS, which are then solely supplied to a US end-customer for its smartphone and wireless earbuds respectively.

AMS also supplies various light/optical sensors to Android-based smartphones (including Chinese brands), but this is done by other contract manufacturers, the brokerage said.

For other divisions, GTB’s key customers are Epson Toyocom (Japan), Osram (Germany), Cree (US), and Soraa Laser (US).

“We estimate China operation roughly contributes about 25%-30% of MPI and Unisem’s revenue. Given that there are no major technological difference and capability between their Malaysian and China plants, Unisem and MPI customers have the flexibility to shift their production if needed, though it might require proper capacity planning and re-qualification again. In other words, there will be additional costs involved, and decision to shift production is typically taken as a last resort.

“Both Unisem and MPI has some indirect exposure to the Chinese smartphone manufacturers (including Huawei), though we cannot exactly quantify this.

“We believe the exposure is mainly through US-based RF companies such as Skyworks andQorvo and China-based UniSOC (formerly Spreadtrum merged with RDA Microelectronics).

Read more at https://www.thestar.com.my/business/business-news/2019/06/26/no-major-disruptions-seen-from-uschina-tech-war/ 


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