Results for the three months ended 31 December 2010 (2Q11)
Q. When do you see the order book for your CMA Division growing beyond $10m?
A. Our aim is to provide complete, timely and accurate information at the end of every quarterly reporting period to enable shareholders and investors to make good investment decisions. Nonetheless, it is not our practice to provide sales forecasts or earnings guidance.
Back to topQ. At S$3 million, your new manufacturing system will be the single largest investment on equipment in the Group's history. Was the system custom built for Micro-Mechanics? What benefits do you expect to derive from this investment?
A. Several elements of the new manufacturing line will be built to specifications which we have designed. Together with various processes we are developing to minimize the time needed to switch from one part to another, we believe the main benefit of this investment will be a new platform that enables Micro-Mechanics to efficiently manufacture a large mix of complex parts. With market volatility and limited order visibility from customers, we believe this type of "flexible manufacturing" is the right strategy for the future.
Q. Is the Group's CMA business concentrated in the USA because your CMA manufacturing facility is based there?
A. About two years ago, we acquired the assets of a company in the Silicon Valley which we used as the basis to start our CMA manufacturing plant in the USA. Although many of our current customers are based in the USA, we believe there are excellent growth opportunities in Asia for our CMA business
Q. What impact will the growth of CMA business have on the Group's GP margin?
A. The GP margin of our CMA business is presently much lower than the GP margin for our semiconductor tooling business, which has affected the Group's overall GP margin. However, the CMA division is still a fairly new business and our aim is to improve its GP margin to somewhere in the range of 30%. Together with ongoing efforts to improve our semiconductor tooling business and keep overhead costs low, we believe both businesses support our overall aim of delivering steady, sustainable and profitable growth.
Q. With the semiconductor tooling market worth about S$ 190 million, do you expect growth of this business to be driven by market share expansion or industry growth?
A. By our estimates, the market for semiconductor tools is about S$190 million per year driven mainly by the growth of the worldwide semiconductor industry. Our aim is to grow by both expanding our range of products and by improving our share of the market. Both are important but in the short-term - after a period of rapid industry growth -- our growth is more likely to come from improving our focus on our existing customers, which are served primarily through our five plants in Asia