Kulicke and Soffa says not everyone in supply chain needs to expand overseas.

catch up with Asian peers, 12 months or more, Nikkei Asia., partnership with Nikkei

The world’s leading chip packaging and testing equipment maker is bucking the trend of supply chain diversification by continuing to expand in Singapore, its main production base, even as major chipmakers rush to build factories in the US, Europe, and Japan.

Chan Pin Chong, executive vice president at Kulicke and Soffa Industries, told Nikkei Asia that the city-state will remain his company’s biggest production site for the foreseeable future.

“Singapore has very strong infrastructure, as a simple example,” Chong said.

“It has many institutes of higher learning which train and produce engineering talents for the high precision manufacturing industry as well as strong government support.”

Singapore has managed the COVID-19 pandemic well, and this has mitigated the disruption to production in meeting customers’ and market demands, the executive said.

“The supply chain was not interrupted much. We had some tightening of controls, but overall it was very stable throughout last year.” Chong said his company managed to handle these challenges “by having multiple sources, spot buys, [and] keeping inventories and alternative designs amid the pandemic.”

His remarks come as the US, Europe, China, and Japan are urging chip companies to onshore more production. Governments are keen to build more resilient supply chains for national security reasons, and some of the world’s biggest companies are heeding their calls.

Taiwan Semiconductor Manufacturing Co., the world’s largest chipmaker, is departing from its decadeslong strategy of concentrating production in Taiwan by building a facility in the US, as well as potentially in Japan and Germany. Intel is expanding its capacity in the US and said it will build plants in Europe and elsewhere, while Globalfoundries, a smaller rival to TSMC, is increasing its capacity in the US, Singapore, and Germany.

Unlike chip manufacturers that need to diversify production because of geopolitical factors and to be close to their customers, Chong said it is a different story for makers of chip production equipment.

As an equipment manufacturer, Chong said his company sees no urgent need to expand production to new locations or move it to the US Kulicke and Soffa, he said, can easily ship tools to all of its customers and has room to expand capacity at its current facilities.

“[Singapore] is a good place to continue to grow our business, and it’s close to all the Asia customers,” Chong said, adding that the city also has “easy access to the rest of Asia.”

Singapore is also attempting to attract more chip industry investment as part of its plan to grow its manufacturing industry by 50% by 2030. The government has a particularly strong appetite to boost semiconductor-related segments to catch up with Asian peers such as Taiwan and South Korea.

Founded in 1951, K&S is one of the earliest tech companies to list on Nasdaq. The equipment supplier began manufacturing in Singapore in 2000 and relocated its headquarters there from Pennsylvania 10 years later.

Chong said K&S will continue to expand production capacity at its existing locations in Singapore, the Netherlands, and Israel as well as China, where it produces consumable parts instead of whole machine sets. K&S counts the US and Europe as its key research and development bases, while Singapore is its largest manufacturing site.

Southeast Asia is an important hub for the chip tools industry. Applied Materials, the top US semiconductor equipment maker, has its biggest manufacturing center outside of its home market in Singapore.

Lam Research recently opened a manufacturing facility in Malaysia that is rapidly ramping up production, CEO Tim Archer said on Monday, adding that the company will continue expanding its workforce in Asia.

Looking forward, K&S sees strong momentum in semiconductors as artificial intelligence, 5G wireless connectivity technology, and electric vehicles take off. The chip equipment maker also expects robust growth in mini LEDs and micro LEDs—new types of displays based on LED technology. They are being used for TVs, public information and automotive displays, digital signage, and consumer electronics devices.

K&S will play a crucial role in addressing the ongoing global semiconductor shortage. Its wire-bonding equipment is an essential tool in the chip packaging process and is also used in the making of power semiconductors, which go into vehicles. Nikkei Asia has reported that delivery times for some chip tools, including K&S’s, have lengthened to 12 months or more, creating a drag on the capacity expansion plans of chip manufacturers, packaging and testing service providers, and substrates suppliers.

K&S’s revenue for its third quarter, which ended July 3, rose more than 180% on the year to USD 424.3 million, while its net profit jumped more than 900% from the same time a year ago. Its stock price has increased nearly 100% since the beginning of this year.

This article first appeared on Nikkei Asia. It’s republished here as part of 36Kr’s ongoing partnership with Nikkei.

Internet Explorer Channel Network


LATEST NEWS

Hong Kong developer New World Development’s China unit will invest US$732 million in Guangzhou urban renewal project

China’s state media blasts troubled community group buying companies for ‘burning cash’

First company banned from China’s centralised drugs procurement programme after it fails to honour contract

Xiaomi posts 64 per cent rise in revenue as the company aims to be world’s largest smartphone maker

China’s top cybersecurity officials seek to calm investor concerns that new regulation could put chill on overseas IPOs

Kuaishou posts 7 billion yuan loss in second quarter as it continues to burn cash

‘AI doctor’ developer Zuoshouyisheng raises USD 15.5 million in Series B

Chinese bank profits expected to have surged in first half as economic rebound eased the burden of bad loan provisions

Foodpanda riders in Chiang Mai strike against pay cuts

TikTok partners with Shopify in latest step to expand its e-commerce efforts

Troubles mount at Evergrande as pipe supplier threatens legal action over delayed payments

Home prices in China’s school districts go off the boil amid crackdown on elitism to ensure balanced allocation of resources

Hong Kong stocks erase gains as tech rally fizzles out before Xiaomi, Kuaishou report earnings

China’s Regulators Set Out Plan To Overhaul Scandal-Hit Corporate Bond Market

China launches new communication technology experiment satellite

Arizona group courts Taiwanese chip companies with new agreement following TSMC’s investment in the state

NEWS RELATED

Apple may be killing the ‘mini' iPhone next year

Apple may no longer continue with the ‘mini’ models of iPhones and the iPhone 13 mini may be the last mini iPhone. As per tipster Jon Prosser, who has a fairly accurate history about iPhone leaks, claims that Apple will not launch the iPhone 14 mini next in 2022. The…

Read more: Apple may be killing the ‘mini' iPhone next year

Top chip tool maker sticks with Singapore amid supply chain shift

TAIPEI — The world’s leading chip packaging and testing equipment maker is bucking the trend of supply chain diversification by continuing to expand in Singapore, its main production base, even as major chipmakers rush to build factories in the U.S., Europe and Japan. Chan Pin Chong, executive vice president at…

Read more: Top chip tool maker sticks with Singapore amid supply chain shift

Huawei phone spinoff Honor stages big comeback in China

Company rides on bold handset drive, but possible US sanctions loom as a threat.

Read more: Huawei phone spinoff Honor stages big comeback in China

China carmaker BYD’s chip unit IPO plan halted by regulatory woes

Probe into law firm handling deal comes as Beijing ramps up scrutiny on tech

Read more: China carmaker BYD’s chip unit IPO plan halted by regulatory woes

‘An iPhone with four wheels’: Inside Foxconn’s bid to build EVs

Apple maker confident of becoming a dominant player in auto supply chain.

Read more: ‘An iPhone with four wheels’: Inside Foxconn’s bid to build EVs

ByteDance Valuation Soars Despite China Tech Woes

picture (Nikkei Asia) — Valuations for ByteDance Ltd. and Huawei Technologies Co. Ltd. have held up or even risen this year while the shares of many listed Chinese technology companies have tumbled amid Beijing’s widening crackdown on the sector, according to a new ranking of the world’s largest private sector…

Read more: ByteDance Valuation Soars Despite China Tech Woes

Philippines to stop accepting digital bank license applications

Number of challengers to traditional lenders to be capped at seven for now.

Read more: Philippines to stop accepting digital bank license applications

Huawei focuses on emerging markets as outlook in West remains dim

Chinese market accounts for 70% of sales, reversing past source of revenue.

Read more: Huawei focuses on emerging markets as outlook in West remains dim

Chinese government builds stake in TikTok-owner ByteDance

China smartphone maker says UK chip plant purchase ‘complete’

Beijing quietly pushes localities to ‘buy Chinese’ in high tech

Will the digital yuan vanquish the dollar?

South Korea’s Krafton plunges in Seoul stock market debut

AirPods 3 release date: Redesigned wireless earbuds could launch alongside 2021 iPhones next month

TikTok overtakes Facebook as world’s most downloaded app

Bukalapak Shares Soar in Indonesia Stock Exchange Debut

OTHER NEWS