Results for the financial year ended 30 June 2017 (FY2017)
Q1. How are the latest advances in chip packaging technology affecting the Group’s semiconductor tooling business?
Semiconductors are becoming increasingly complex with device geometries now moving towards and below 10 nanometers. In this Nano world of manufacturing, it is no longer enough for suppliers to just be good at machining. To prevent reliability issues and other processing defects, our customers in the chip assembly and test industry require tools with smaller features, tighter tolerances and greater precision, as well as new materials and processes that are geared to control the cleanliness of the tools.
With our capital and engineering resources, Micro-Mechanics is well positioned to support the more complex design and manufacturing capabilities required for this Nano world. We are continuously developing advanced machining processes such as laser cutting, electrical discharge machining, high-speed milling and elastomer molding, while also improving our supporting processes including new materials, testing, cleaning and packaging.
Back to topQ2. Capacity utilization increased to 62% in 4Q17. Will the Group have sufficient capacity to cater for further increases in customer orders?
Our capacity utilization measures the usage of all the equipment in our five factories including supporting machines that are not constantly in use. Because our manufacturing involves many different types of processes which are not easily modeled into a single denominator, we consider capacity utilization rate to only be a rough guide of our overall factory efficiency.
During 4Q17, some of our machines were highly utilized while supporting machines were only around 10% utilized. As we view cycle time as one of the Group’s key competitive advantages, we always ensure there is sufficient buffer for us to fulfil our customers’ orders for semiconductor tools within a target timeframe of 6 to 8 days.
Q3. What is the Group’s capital expenditure budget for FY2018? How much of it will be to replace existing machines?
Our management team is currently working out the Group’s capital expenditure needs for the new financial year. An estimated capital expenditure budget will be disclosed when we release our results announcement for the first quarter of FY2018.
We believe in the importance of investing to enhance our capabilities as it shapes the Group’s future. For FY2018, our focus will be to further improve the level of automation in our factories and the speed of our product delivery to customers.
Q4. Can you share the progress made at the Group’s subsidiary in the USA (MMUS) following the decision to focus its business on the semiconductor industry. What kind of products are you making for wafer fabrication equipment?
It was a good decision as MMUS has made steady progress in every quarter of FY2017. In 4Q17, revenue at MMUS increased 55.8% year-on-year to S$2.9 million to record a profit of S$0.2 million. With these encouraging results, growing customer engagement and the positive outlook for the semiconductor industry, we believe there are exciting opportunities ahead for MMUS.
The focus at MMUS is to supply the critical parts that regulate the wafer-fabrication processes. As the requirements for making such parts become increasingly complex and stringent, we believe there will not be many suppliers that have the capability, resources and vision to thrive in this demanding arena.