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1st Silicon (Malaysia) Sdn. Bhd.
Australian Universities International Alumni ConventionAugust 24 – 27, 2000
Kuching, Sarawak, Malaysia
11stst Silicon (Malaysia) Sdn. Bhd.Silicon (Malaysia) Sdn. Bhd.
Malaysia’s entry to the Malaysia’s entry to the 2121stst Century EconomyCentury Economy
GLOBALIZATION AND THENEW WORLD ORDER
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Semiconductor’s Growing Semiconductor’s Growing Percentage of ElectronicsPercentage of Electronics
Computer Type S/C Content ($)
Mainframe 8 – 10%
Midrange Systems 10 – 14%
Workstations 15 – 18%
Personal Computer (PC) 30 – 35%
Personal Digital Assistant(PDA) 40 – 50%
Source: Integrated Circuit Engineering Corp. & SIA 2000
Semiconductor Growth ProjectionSemiconductor Growth Projection
0
50
100
150
200
250
300
350
1992 1994 1996 1998 2000 2002 2004
CAGR ‘99-04:13.6%
Dataquest James Hines August 2000,“ The Industry Soars Once Again!”
US$B
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l Increasingly positive macro-economic climate
l Electronic goods consumption gaining momentum
l Semiconductor market enters further growth cycle
l Semiconductor capital spending accelerating
Current Industry EnvironmentCurrent Industry Environment
Strengthening Demand
0
200
400
600
800
1000
1997 1998 1999 2000E 2001E 2002E 2003ECellular Handsets PCs
Source: Dataquest
CAGR 37.7%
Millions/Units
CAGR 16.5%
• Communication tools have overtaken computing products as the main drivers for the increased demand for semiconductors
• Demand for cellular phones has grown 2 times faster than demand for personal computers
Industry DriversIndustry Drivers
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Fab Projects Built and Announced for Fab Projects Built and Announced for 2000 2000 -- 2002: Tally As of April 1, 20002002: Tally As of April 1, 2000
Number of Fabs
Average Number of Fabs Needed
3945
41
28 26 27
38
4744
29
16
5
1920
0
10
20
30
40
50
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source : Dataquest August 2000More Fabs Needed to Support Semiconductor Industry Growth
2000 Capital Spending Increased by 2000 Capital Spending Increased by US$9 Billion Since Early JanuaryUS$9 Billion Since Early January
Sources: Company Reports, Morgan Stanley/DW,Applied Materials Corporate Marketing est.
Cap Ex 2000E % Growth
Current $44.6B 43.6%
Previous $35.7B 18.8%
2000 Ranking Company
Est. 2000 Capital Spending ($M)
% Change 2000 Over 1999
1 TSMC 4,693 106%
2 Intel 4,500 50%
3 Motorola 2,600 73%
4 UMC Group 2,375 54%
5 Samsung 2,350 32%
6 Hyundai 2,200 175%
7 TI 2,000 40%
8 STM 1,800 34%
9 NEC 1,587 21%
10 Micron 1,400 40%
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• Benefits of Foundry to Fabless Companies
• Lower Wafer Cost
• Reliable Supply
• Assurance over Time
• Shorter Cycle Time
• Minimize Risk Involved in Building and Operating a Fab
• Low Process Technology Development
• Significant Tax Incentives
• Advantages of “Pure-Play Foundries” over Integrated Device Manufacturing (IDM)
• Lower R & D Investment
• Lower Overhead
• Focus on Manufacturing.
The Foundry BusinessThe Foundry Business
lTime-to-market & increasing fab capital costs
lLower-risk way to enter IC industry
lCustomers’ focus on core competency
l Foundries expertise in meeting customers’ needs
Foundry Growth DriversFoundry Growth Drivers
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Foundry Supply Tight Through 2002Foundry Supply Tight Through 2002
0
5
10
15
20
25
99 00 01 02 03 04
• 1999-2004 CAGR = 25.4%
• Forecast over 50% growth in 2000
• Demand from fabless and growing IDM outsourcing trend
• Oversupply and price pressure returns in 2003
US$B Foundry Projection
-10%-5%
0%
5%
10%
15%
20%
25%
30%
35%40%
98 99 00 01 02 03 04
• Rapidly growing demand and spending cuts burned off excess capacity in 1999
• Foundries spending to catch up with demand
• Expect tight capacity for next 2-3 years
• Oversupply emerges in early 2003
Foundry Overcapacity
Source : Dataquest August 2000
Semiconductor DemandSemiconductor Demand
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Americas Europe Japan Asia Pacific
$Billions
Source: SIA June 2000 Forecast
Worldwide Semiconductor ForecastRegional Totals
l Semiconductor demand has grown significantlyl World growth of electronic products looks good for next 5 yearsl Communication tools have overtaken computing products as the main
drivers for the increased demand for semiconductors
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Malaysia’s EconomyMalaysia’s Economyl Malaysian economy experienced a speedy recovery from the Asian
crisis of 1997.l 52% of Malaysia’s total exports consist of electrical and electronic
products, which is equivalent to approximately US$90 billion a year
Clothing and Accessories 3%
Wood Manufactures 2%
Other Manufactured Goods and
Articles 13%
Timber2%
Crude Petroleum
3%
Liquified Natural Gas
3%
Palm Based Products
7%
Electrical and Electronic Products
66%
Rubber1%
Malaysia’s Export by Product 1999 - 2000 Source: Department of Statistics, Malaysia
Consumer Electronics
Disk Media
Silicon Wafer Assembly & Packaging
Printed Circuit Board
Unisem (M) BerhadCarsem SemiconductorASE ElectronicsHPMotorolaAMDNSCST
Wafer Fabrication
MEMCSEH
HADCOIntel
SHARPNationalToshiba
KomagWestern Digital
Electronic Components
TOKO ElectronicTaiyo Yuden
Operating in Sama Jaya Free Industrial Zone
Malaysia's Electronic Malaysia's Electronic InfrastructureInfrastructure
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One-stop solution for fabless design houses and IDMs
Sales & Marketing
Engineering Support
Production Planning
Delivery Management
Quality Assurance
CIM Support
Design Support Center
Photomask
Wafer Fabrication
Support Functions 1st Silicon Services
Wafer Sort
Wafer Back Grind
Assembly
Final Test
Drop Ship
Total Customer
Satisfaction
Services Provided Optional Services
Foundry Service OverviewFoundry Service Overview
11stst Silicon in Sama Silicon in Sama Jaya Jaya Free Industrial ZoneFree Industrial Zone
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Key Characteristics of the Key Characteristics of the ProjectProject
• Project has government support- Malaysian Federal and State
Government guarantee worth US$300M
• Abundant natural resources to support facility
• Good time to market
• Capital structure and loan financing in place
• SHARP Corporation as technology partner
• Equipment from world class, equipment manufacturers
•Skilled workforce
- Current headcount currently stands at more than 300 employees, 70% of which are engineers
•Geo-political stability
- Located outside the Pacific Ring of Fire
•Good infrastructure
- Stable electrical and water supply
Fab OverviewFab Overview
n Company : 1st Silicon (Malaysia) Sdn. Bhd.
n Date of Incorporation
: 13 January 1998
n Location : Sama Jaya Free Industrial Zone Kuching, Sarawak, Malaysia97 acres of industrial land (can accommodate 3 wafer fabs)
n Project Size : USD$ 1 billion First deep sub micron wafer fab in Malaysia
n Type of business: "Pure Play" Foundry
n Output : 30,000 wafers/month
n Product Type : 0.25µm 5LM and 0.18µm CMOS Logic
n Turnkey Contractor
: Meissner + Wurst Zander (Germany)
n Project Manager : Turner & Townsend (UK)
n Construction : Q1/1999
n Water Tight Building
:
Q4/2000:
12/1999
n Customer base : SHARPOther customers comprising of FSAs(fabless), IDMs (integrated devicemanufacturers) and OEMs (original equipment manufacturers)
n Human Resources : An international core team of over 120people is already in place. Key executiveshave extensive experience with renowned semiconductor companies
n Production
n Technology Partner : SHARP
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The Administration BuildingThe Administration Building
Q1, 1999n Appointed M+W ZANDER as turnkey contractor
(30/3/ 99)
n Signed and concluded technology and wafer supply agreement with SHARP (30/3/99)
n Obtained Malaysian Federal and State government guarantee (30/3/99)
n Obtained loan from European Consortium of Banks (30/3/99)
Q1, 2000n Fab certified as watertight (17/1 /00)
n US Subsidiary established in Silicon Valley (24/1/00)
Q2,2000n Administration building completed and handed
over by M+W ZANDER to 1st Silicon (18/4/00)
n Staff moved into new admin building (20/ 4/00)
n The first 747 cargo jet lands in Kuching International Airport, signaling the beginning and installation of the first batch of equipment, (3/5/00)
Q2, 2000n Applied Materials CEO visits 1st Silicon fab in
conjunction with US$100 Million equipment purchase (4/5/00)
n Financial foundation worth over US$600 Million including loans from US EXIM Bank(15/5/00)
n SHARP technology support team arrives in Kuching (23/5/00)
n SHARP and 1st Silicon agree to expand relationship by including wafer shipments worth US$300 Million over next few years (30/6/00)
Q3, 2000n 1st Silicon elects IBM to implement CIM and
e-business systems (7/7/00)
n Nomura provides funding of US$180 Million (18/7/00)
n Japan Bank for International Cooperation (JBIC) signs financing agreement for a loan worth US$59.5 Million (14/08/00)
Project AchievementsProject Achievements
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0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Q1/99 Q4/99 Q1/00 Q2/00 Q3/00 Q4/00 Q1/01 Q2/01 Q3/01 Q4/01
Capacity TimelineCapacity Timeline
The equipment purchased will support the capacity timeline as shown below
Construction(Green Field)
12/99Water Tight
5/00Equipment
Move-in
9/00QualStart
12/00Full Qual
2k
7k 12k 20k17k
Wafers/month
200mm Wafers200mm Wafersl 200mm wafers are expected to remain as high demand
products until the year 2005
125mm14.2%
200mm43.3%
<125mm7.3%
150mm34.3%
1999 Wafer Area
300mm0.9%
2005 Wafer Area
200mm54.1%
150mm19.2%
300mm14.7% 125mm
8.2%
<125mm3.5%
Source: Dataquest
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l Exceptional technology partnership – SHARPl Dedicated SHARP experts on site for technology transfer,
qualification and production rampl Strong volume business commitment from day one of
operationl 2 Major US fabless customers, 1 tapeout targeted by end of
September 2000, 1 tapeout Q1 2001l Non-volatile memory technology and business partnership
secured for Q3 2000 technology transfer-qual startl Several equity and business partnerships in negotiation
Excellent Partnerships in Technology Excellent Partnerships in Technology and Businessand Business
Photolithography Equipment MovePhotolithography Equipment Move--InInMay 2000May 2000
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0.1
1
1994 1995 1996 1997 1998 1999 2000 2001 2002
Min
imum
Fea
ture
Siz
e of
Prod
uctio
n
0.2
0.3
0.40.5 TSMC/UMC
SIARoadmap
Intelµµp
1Si
0.18um
0.25um
Foundry Technology RoadmapFoundry Technology Roadmap
The EmployeesThe Employees
l Current headcount is >360 employees
l 23% of employees have received their education at recognized international universities
l 50% hold degrees or higher
l 81% are local Sarawakians, 5% are Malaysian, 14% are from other nationalities Year 2 0 0 0
215
305
515
670
0
100
200
300
400
500
600
700
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Expected Headcount for the Year 2000
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l 11 new 300mm fabs announced for 2002 a major supply factorl IDMs outsourcing momentum a major demand factorl IDMs and traditional ASICs turn foundry a possible supply swingl Oversupply and price pressure projected to return 2003l Greater automation and flexibility in productionl Supply chain infrastructure lacks industry standardsl Global competition for engineering talent and resourcesl Competing in the new foundry economy requires system-level integration
manufacturing solutions
Fab Projects Built and Announced for 2000 -2002: Tally As of July 1, 2000
3945
41
28 26 27
38
47
29
2024
30
14
44
0
10
20
30
40
50
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Number of Fabs
Average Number of Fabs Needed
Source : Dataquest August 2000
Industry is watching, how many new 300mm announcements will be filled
Challenges and IssuesChallenges and Issues
ASP by Customer
500
700
900
1100
1300
1500
1700
1999E 2000F 2001F 2002F 2003F 2004F
US
$/w
afer
Fabless IDM System OEM Average
Source: Dataquest, Nomura Securities Taipei
l Business : Increasing semiconductor content and accelerating global foundry industry growth
l Market : Supply diversification a business imperativel Capacity : Entering demand cycle with ready capacity, greenfield fabs’
impact not ready until ~18 months laterl Technology : Sweet spot of mainstream volume production at 0.25uml Financial : Rising ASP trends
OpportunitiesOpportunities
Source: Dataquest and Nomura 2000
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l 0.18um Technology options close to finalization for 2001 implementation
l Facility expansion plan for Fab2 - 3
l IPO plan
Preparing for Next GenerationPreparing for Next Generation
11stst Silicon Silicon ––The Malaysian AdvantageThe Malaysian Advantage
l Viable supply source in geo-politically stable regionl Abundant natural resources critical to ensure supply integrity
and continuityl Well educated, English speaking, multi-cultural multi-lingual
workforcel Well established electronic manufacturing infrastructure and
foundry support infrastructure in Malaysia and Singaporel Strong government incentive program for technology
venturesl Quality of life parallel to developed regions in convenience
and safety, but without the pollution and congestion
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Thank YouThank You
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