Results for the six months ended 31 December 2012 (1H13)
Q. How has the Group developed the CMA business since acquiring the US company a few years ago?
We acquired the assets of our CMA business in the USA in 2008, shortly before the onset of the financial crisis. The transition period to build this business turned out to be more challenging than expected because of the "Great Recession" in 2008.
In the last few years, we focused on programs aimed at enhancing the quality, cost and cycle-time performance of the USA factory. Of significance is our investment in a 24/7 Machining Line, a highly automated system for around-the-clock machining of complex parts which would enable us to meet customers' demand for fast and cost-effective manufacturing. We received our first production order for our 24/7 Machining Line in July 2012.
Back to topQ. Has CMA division met the goals you had when you acquired the company?
The CMA business is a key part of our long-term strategy to grow our business beyond our core semiconductor tooling business to achieve wider industry and geographical diversity. The CMA business also helps to accelerate the growth of our engineering and manufacturing knowhow and capabilities.
To-date, we have achieved three key objectives for the CMA business:
- Expanded and diversified our customer base to equipment manufacturers in four new industries - laser, medical, aerospace and semiconductor-wafer fabrication;
- Added significantly to our knowhow and capabilities through the people at our CMA operations who brought skills, experience and knowhow not readily available in Asia; and
- Started developing repeatable and scalable processes focused on the fundamentals of success - quality, cycle time, cost and service.
The next stage for our CMA business is to strengthen our 24/7 Engineering Team and scale our manufacturing volume. We believe our strategy to develop repeatable, scalable and cost-effective manufacturing processes will provide flexibility to maneuver in the volatile business environment.
Q. Does the semiconductor tooling business serve other chip packaging processes such as flip chip besides die-attach and wire-bonding?
Presently, the bulk of our core tooling products are used in the traditional technologies of die-attach and wire-bonding processes. Although we are also involved in certain products for flipchip and wafer scale packaging, a signification portion of the semiconductor packaging industry still uses the traditional technologies.
Micro-Mechanics has been producing precision tools for the semiconductor assembly and test industry for 30 years. We continuously follow market trends and develop tools to suit changing requirements. The skill sets we have developed in machining very fine mechanical tools are essentially the same as that required for tools used in newer processes.
Q. Have the demand drivers for your semiconductor tooling business changed over the last year?
The two key drivers for our semiconductor tooling business remain unchanged, which are the volume of chips produced, and the miniaturization and densification of semiconductors. As semiconductors become thinner and more delicate with more functions packed onto a smaller area, the tools required for chip packaging would require an even higher degree of precision than before. To cite an example, precision feature size could mean 20 microns 20 years ago but today, the definition of precision is in the range of 3 to 5 microns.
At Micro-Mechanics, we have developed new micro-manufacturing processes to produce tools with feature sizes previously out of reach or too costly to bring to market. We believe this ability will further improve our competitive position as more demanding industry requirements raises entry barriers and could lead to exit of players who are unable to invest in technology and skillset upgrades.
Q. What do you think are the initiatives that can enable the Group to outperform the industry?
We are increasing our focus on customers through better understanding of their continually changing needs. For example, customers expect shorter delivery lead time these days. We need to continue targeting the right areas to fulfill customers' expectations. We are also increasing our focus on implementing automated processes that are repeatable, scalable and cost effective to reduce our dependence on skilled labour and increase our manufacturing flexibility.
The Group has also started an in-house learning centre to enhance strategic thinking, planning and leadership skills of our people. Our courses are targeted at helping our people improve their decision-making through a deeper understanding of our customers and the market place. With our initiatives, we believe Micro-Mechanics has the ability to grow at a faster pace than the industry.
Q. Is the Group planning to install the 24/7 Machining Line at its factories in Asia to achieve repeatable and scalable processes?
We are not replicating in Asia the same equipment we have in the USA factory. Through the experience we had with our USA operations, we learned and gained know-how of 24/7 machining processes. We are currently introducing and implementing the 24/7 production fundamentals - more automation and less manned operations - at our plants in Malaysia and Singapore using existing equipment. In the past two financial years, we have already invested in equipment to expand and strengthen the manufacturing capacity and capabilities of our factories in Asia. Our focus in FY2013 is to incorporate the 24/7 principles into our manufacturing processes by using our existing machines more effectively to lower cost, and improve cycle time and product quality.