Posted on 10 Oct 2011
Malaysia-made automated semiconductor equipments are likely to be priced lower next year due to a projected drop in global spending on semiconductor equipment.
This is likely to affect Penang, a renowned manufacturing centre for automated equipment used in the semiconductor, electronics, medical and motor vehicle sectors.
Owing to excess inventory and poor demand as a result of the slowing macro economy, worldwide semiconductor capital equipment spending is expected decline from a projected US$43.5bil (RM137.3bil) in 2011 to US$35.2bil (RM111.1) next year. This represented a decline of 19.2%, a Gartner research house report said on Sept 30.
Locally made automated semiconductor equipment are already priced competitively on the international market to rival those from South Korea and China. To attract buyers amid a weakening market, selling prices of locally-made automated semiconductor equipment are expected to fall further next year.
The slowdown in semiconductor spending globally is expected to last for the remainder of 2011 and going into the first half of 2012.
“By mid-2012, Gartner expects the supply and demand to be more in balance,” the report said.
Pentamaster Corp Bhd executive chairman C. B. Chuah said that prices were expected to come down next year.
“Orders for the group's semiconductor equipment, such as material test handlers, for the fourth quarter this year are expected to drop by half, compared with the third quarter and the fourth quarter a year ago.
“Next year, to compete for customers, we may have to lower the pricing for semiconductor equipment with less complex functions and maintain competitive pricing for equipment with enhanced features.
“The contribution from semiconductor equipment to the group's revenue is expected to be around 20% for 2012, compared with about 50% in 2011.
“There should be some restocking of semiconductor equipment in the first quarter 2012, but prices are expected to remain soft,” Chuah said.
High-end semiconductor equipment, such as material test handlers, from Malaysia and South Korea are currently priced at between US$100,000 (RM315,600) to US$200,000 (RM631,200), down 20% from last year. This is the international market range. The machine vision system equipment is priced from US$20,000 (RM63,120) onwards on the international market.
China-made semiconductor equipment are priced about 30% lower.
The business opportunity or timeframe for the consumer electronics manufacturing sector had also become shorter, Chuah said.
“Customers want a shorter delivery time for their orders, so that they can push their new products onto the market before the business opportunity closes.
“For equipment manufacturers like us, we must have a reasonable inventory even during economically challenging times, otherwise we will not be able to deliver equipment within four weeks, compared with eight weeks a year ago,” he said.
Vitrox Corp Bhd managing director Chu Jenn Weng said the group's semiconductor business would generate about 40% of revenue next year, versus about 50% this year, due to the slowdown. “The downward pressure on our semiconductor equipment prices is always present due to competition, but during bad times, the pressure for prices to drop is greater,” he said.
Vitrox still has not received any strong market feedback from customers for the fourth quarter this year and the first quarter of 2012.
Globetronics Technology Bhd chief executive officer Heng Huck Lee said the group's fourth quarter was expected to be flat, compared with last year's corresponding period.
“There are signs that the first quarter of next year will be softer, as the mobile phone and personal computer segments are weakening. However, we expect to see some sort of recovery in the second quarter.
“Price pressure on products will always be there, but it will be gradual,” he said.
AT Systemisation Bhd managing director Beh Lai Lien said the group's business in manufacturing disposable parts and components for automated process equipment used in the hard-disk drive and consumer electronics industries was less volatile.
“During economic crisis, many MNC (multinational corporation) manufacturers in Malaysia tend to save costs and replace parts rather than buy new equipment. We do not expect growth in this segment,” he added.
On a positive note, Beh said the group's business in Suzhou, China which manufactures automated equipment for the automotive and medical sectors was expected to grow.
