BJMP 3053 OPERATIONS STRATEGY

COLLEGE OF BUSINESSSCHOOL OF TECHNOLOGY MANAGEMENT AND LOGISTICS

BJMP 3053 OPERATIONS STRATEGYGROUP AFISRT SEMESTER SESSION 2013/2014

Topic: SilTerra Malaysia Sdn Bhd - Capacity Strategy

Prepared for: Dr Adam bin Mohd Saifudin

Prepared by: Group 4

Siti Nur Azilah binti Ahmad Nasir 205508 Phoon Jia Voon 205594 Fauzi bin Ab Rashid 205624 Ong Sok Ying 205776 Lee Yun Hui 207186 Muhamad Amirul bin Mohd Zainudin 207187

BJMP 3053 OPERATIONS STRATEGY

Submission Date:

Assignment Cover Sheet

Name:(Refer to list)

Student ID Number:(Refer to list)Group Name:Group 4

College: College of Business

E-mail Address: (Refer to list)

Phone Number: (Refer to list)

Assignment Name: SilTerra Malaysia Sdn Bhd

Subject Name: BJMP3053 Operation Strategy

Name of Senior Lecturer: Dr.Adam bin Mohd Saifudin

Due Date: 19th November 2013

Please tick the following and sign below: I certify that I have read and understood the plagiarism policy of the Faculty of Business Management, UUM. I certify that this assignment is my own work; based on personal study and research, and that I have acknowledged all material and sources in the preparation of this assignment. I certify that myself or another person has not previously submitted the assignment, for assessment in any other unit or at any other time. I have not copied in part or whole or otherwise plagiarized the work of other students or persons. Signed Date19th November 2013IMPORTANT:Please note that assignments will not be accepted without a completed cover sheet attached.

Assignment Cover Sheet

Signature of Group MembersNoName

Signature

1.205508 Siti Nur Azilah binti Ahmad Nasir

2.205594 Phoon Jia Voon

3.205624 Fauzi bin Ab Rashid

4.205776 Ong Sok Ying

5.207186 Lee Yun Hui

6. 207187 Muhamad Amirul bin Mohd Zainudin

Group Members Profile

Siti Nur Azilah binti Ahmad NasirMatrix Number: 205508Phone Number: 013-4021772 Email: s205508@student.uum.edu.my

Lee Yun Hui Matrix Number: s207186Phone Number: 016- 4424023

Phoon Jia VoonMatrix Number: s205594Phone Number: 017- 9133200Email: s205594@student.uum.edu.myFauzi bin Ab RashidMatrix Number: s205624Phone Number: 019-4514524 Email: s205624@student.uum.edu.myMuhamad Amirul bin Mohd ZainudinMatrix Number: s207187Phone Number: 013-3078186Email: s207187@student.uum.edu.myLee Yun HuiMatrix Number: s207186Phone Number: 016- 4424023Email: s207186@student.uum.edu.my

Ong Sok YingMatrix Number: s205776Phone Number: 012- 4694810 Email: s205776@student.uum.edu.my

Acknowledgement

First and foremost, we are from group 4 would like to express our special thanks to our Senior Lecturer, Dr. Adam bin Mohd Saifudin who coaches us Operation Strategy in this semester. We would like to express our sincere thanks to him for his guidance, monitoring, invaluable advice and encouragement throughout the entire duration for completion of this research. Secondly, we wish to gratefully acknowledge SilTerra (M) Sdn Bhd which allows us conducted our research at their wafer fabrication. We would like to thank the staff in SilTerra (M) Sdn Bhd for their dedicated help and support throughout the study and their useful insights. Thanks a lot to Mr. Ismail (Officer of Corporate Development and External Affair Department), Mr. Mohd Hazmuni (Senior Manager of Industrial Engineering), Mr. Mohd Azizi (Senior Member of Technical Staff Industrial Engineering and Mr. Ong Boon Teong (Manager of Manufacturing Training and Enhancement) for their valuable information provided by them in their respectively fields.At the same time, we would not forget to take this opportunity to express our appreciation to the all group members who contributed for completion of this project. This project would not be successful without the tremendous contribution, cooperation and commitment from all group members. This project is the greatest result for our group. Lastly, we would like to thank our lovely families for their love and moral support which gave us the strength to complete this project successfully. Furthermore, we would also like to thank all friends and people who help us directly and indirectly to complete this project. Without helps of the people we mentioned above, we would not complete this project on time. We are extremely appreciated for their helps.

Group 4, Operation Strategy

Executive Summary

For this report, our group has chosen SilTerra (M) Sdn Bhd to investigate. We based on the Chapter 4 of Capacity Strategy(Slack & Lewis, 2011) to investigate and explore this company. A manufacturing strategy can be determined to be a set of related objectives and implementation programs applied in a companys manufacturing functional. The aim of any manufacturing strategies is to develop long-term and maintain competitive advantages in the marketplace. The manufacturing should be ensure the companys management matches the markets demand, and address supplier and customer requirements.SilTerra (M) Sdn Bhd is located at Kulim Hi-Tech industrial park, Malaysias first high technology industrial park in northern Malaysia, and about 25 km from the Penang Port. Kulim Hi-Tech Park (KHTP) officially opened in 1996 and the first Hi-Tech Park in Malaysia. The KHTP is situated in the district of Kulim, in the state of Kedah. Currently, the development of KHTP covers an area of approximately 1,700 hectares approximately 4,000 acres. The site was master planned so that in the future SilTerra (M) Sdn Bhd will be able to double the manufacturing capabilities. SilTerra (M) Sdn Bhd is a premier semiconductor manufacturing service provider that offers customers with leading-edge CMOS process technologies. Nowadays, the wafer fab facility is able to manufacture LOGIC and ASIC devices on 200 mm wafers. The CMOS High Voltage Technology being used in the design and fabrication of Display Driver ICs (DDI), it is widely used in the mobile devices market segment. This includes display drivers for mobile phones, GPS equipment, MP3, MP4 and Personal Media Players (PMP), Digital Cameras and other similar applications.The aim of SilTerra (M) Sdn Bhd is to deliver silky-smooth to the chip manufacturing business. The Silicon Foundry Company is to provide contract manufacturing wafers. SilTerra (M) Sdn Bhd produces world-class performance to its customers seeking flexible capacity. When Customers send their own designs for SilTerra (M) Sdn Bhd, it will be according customer requirement to produce chips. Almost half of the products are shipped to the United States, Taiwan and South Korea each receives 25%. SilTerra (M) Sdn Bhds investors including two investment arm of the Malaysian Ministry of Finance, which owns about two-thirds of SilTerra (M) Sdn Bhd such as LSI Corp., Bank Industry Malaysia, and Walden Holdings.Although the company SilTerra (M) Sdn Bhd is one of the well- known manufacturers of semiconductor products in Malaysia, but weaknesses are in exist in this company. From the result of SWOT and Tows matrix, we had found some weaknesses in this company but that is not very affected to this company. If SilTerra as early as possible can overcome those weaknesses then it will become a very successful in the Industry of Semiconductor. Besides that, we have seen that the company's success in improving the development and increase production and become a successful semiconductor company in the future.

V

CONTENTSAssignment Cover SheetIAssignment Cover SheetIIGroup Members ProfileIIIAcknowledgementIVExecutive SummaryV1.0INTRODUCTION12.0COMPANY BACKGROUND22.1 COMPANY PROFILE32.2 ORGANIZATION STRUCTURE72.3 COMPANY LOCATION82.4 AWARD102.5 FINANCIAL STATUS123.0INDUSTRIAL PROFILE: PORTERS COMPETITIVE ADVANTAGES123.1 THREAT OF NEW ENTRANTS133.2 THREAT OF SUBSTITUTE PRODUCTS143.3 BARGAINING POWER OF BUYERS143.4 BARGAINING POWER OF SUPPLIERS153.5 COMPETITIVE RIVALRY EXISTING WITHIN AN INDUSTRY164.0 PESTAL ANALYSIS184.1 POLITICS FACTOR184.2 ECONOMIC FACTOR194.3 SOCIAL FACTOR204.4 TECHNOLOGY FACTOR214.5 ENVIRONMENT FACTOR224.6 LEGAL FACTOR235.0 ORGANIZATION STRATEGIES245.1 CORPORATE STRATEGY245.1.1 ECONOMIC SCALE AND BETTER COST STRUCTURE245.1.2 INVEST LARGER AMOUNT INTO R & D255.2 BUSINESS STRATEGY255.2.1 COST LEADERSHIP255.2.2 RAPID RESPONSE (NEW PRODUCT DEVELOPMENT)265.3 FUNCTIONAL STRATEGY285.3.1 FINANCE285.3.2 HUMAN RESOURCE285.3.3 RESEARCH AND DEVELOPMENT (R&D)295.3.4 OPERATION306.0 STRATEGY ANALYSIS386.1 SWOT ANALYSIS386.2 TOWS ANALYSIS537.0 STRATEGIES COMMENTS AND RECOMMENDATIONS548.0 CONCLUSION61REFERENCES63APPENDIX

1.0 INTRODUCTION

We are study about Chapter 4 Capacity Strategy (Slack & Lewis, 2011).To complete this assignment, we choose SilTerra (M) Sdn Bhd as the company for site visit. SilTerra (M) Sdn Bhd is a semiconductor manufacturing which produce wafer and supplies contract manufacturing service. The customers can send their own design to SilTerra (M) Sdn Bhd which then the finished chips will produce in the wafer fabrication. Before go for SilTerra (M) Sdn Bhd, we gather information and study about this company. Our main resource is from the web page of SilTerra (M) Sdn Bhd (www.silterra.com, 2013). When the interview session, we try get the information which is cannot get from internet and other resources. Due to the SilTerra (M) Sdn Bhd not a publish company, the annual reports for this company are not published in the bursa saham and not allow show to us. After go for SilTerra (M) Sdn Bhd, all information are collected and we able to start to prepare our report. Firstly, we use Porters Five Force approach to analyze opportunities and overall competitive advantage of the organization. Next, PESTAL analysis is used to analyze the external marketing environment factors which have impact on the organization. The result of this analysis will be used to identify the threats and weakness in SWOT analysis. When both of these analyses are done, we look into the organization strategies which include cooperate, business and functional strategies. Based on all the analysis had done, a SWOT analysis was carried out and TOWS matrix was conducted. At the last, we give some comments and recommendations based on the TOWS analysis for Silterra (M) Sdn Bhd. 2.0 COMPANY BACKGROUND

SilTerra (M) Sdn Bhd is manufactures semiconductor wafers and catalyst for high technology investments in Malaysia. It was founded in November 1995 as Wafer Technology Malaysia Sdn Bhd. In December 1999, it was renamed as Silterra (M) Sdn Bhd. SilTerra (M) Sdn Bhd broke ground on first manufacturing facility in Kulim Hi-Tech Park (KHTP), Malaysia in June 1999. In 2000, it starts produced working silicon. Since it was established, SilTerra (M) Sdn Bhd has served many top-tier global fables design and product companies covering the consumer electronics, communications & computing, and mobile device market segments. SilTerra (M) Sdn Bhd offers CMOS design and a broad range of fabrication processes for Integrated Chips (IC) in Advanced Logic, Mixed Signal & Radio Frequency and High Voltage applications. The CMOS High Voltage Technology being used in the design and fabrication of Display Driver ICs (DDI), is widely used in the mobile devices market segment. This includes display drivers for mobile phones, GPS equipment, MP3/4 Personal Media Players (PMP), Digital Cameras and other similar applications (www.silterra.com, 2013). Start from 2001 to 2012, SilTerra (M) Sdn Bhd achieved ISO 9002, ISO 140001, ISO 9001:2008, and OHSAS 180001: 2007 Certification. Besides ISO certification, SilTerra (M) Sdn Bhd also awarded honourable Prime Ministers Hibiscus Award for Notable Achievement in Environmental Performance for year 2002/2003, 2004/2005, and 2006/2007.

2.1 COMPANY PROFILE

Vision Make SilTerra (M) Sdn Bhd the cornerstone for expanding the Malaysian Semiconductor Industry.

Mission Deliver world-class semiconductor manufacturing services to our customers. Provide our customers with outstanding customer service, logistics, and IP support. Make SilTerra (M) Sdn Bhd a profitable enterprise that is continuously growing with innovation and knowledge and maximize the return on investment for our shareholders.

Headquaters Silterra Malaysia Sdn.Bhd.(368948-D)Lot 8, Phase IIKulim Hi-Tech Park09000 KulimKedah Darul Aman,Malaysia

Email www.silterra.com

Fax +604-401 5005

Contact Number +604-401 5111

Milestones 1995 20001995 Company founded known as Wafer Technology Malaysia Sdn. Bhd. 1997 Opened USA Office at San Jose, California1999 Construction Commenced at KHTP1999 Rename as Silterra Malaysia Sdn. Bhd.

2001 2005 2001 180nm production started2001 ISO 9002 Certified2002 Semiconductor International Top Fab Award2002 ISO 14001 Certified2003 Opened Taiwan Office at Hsin-Chu City2003 ISO 9001 CertifiedBest High-Technology Manufacturing Facility Award2003 130nm Pilot Production Ready PRIME MINISTERS HIBISCUS AWARD Notable Achievement2004 Opened Sales office at Kuala Lumpur

2006 2010 2007 Jointly developed 90nm and 65nm with IMEC2007 160nm High Voltage Production Ready Achieve Sony Green Partner Award2008 130nm High Voltage Production Ready OHSAS 18001: 2007 Certified2009 110nm Pilot Production Ready2009 Frost & Sullivan Technology Implementation Award Power MOSFET Production Ready HR Award - Silver Recognition for HR Excellence Category2010 LG Electric Supplier Appreciation Award Prime Ministers Product Excellence Award 2009

2010 2012 2011 Named as one of the Best Employers in Malaysia according to Aon Hewitt Consulting - Asia Pacific. 1Q2011 Acknowledged in the Export Excellence Category as part of the Prime Minister's Industry's ExcellenceAward 2010, organized byMinistry of International Trade and Industry (MITI).2011 Finalist of the Prime Minister's Quality Management Excellence Award (QMEA) 2011.2012 Conferred an award by the Malaysian Scientific Association(MSA) in recognition of SilTerra's outstanding contribution to Science & Technology.2012 Winner of the "Employee's Safety & Health Award 2012"(Electric & Electronic Category) conferred by Ministry of Human Resource.2012 Conferred the "Competitive Employer Award" at the 2012 Labour Day Celebration - by the Prime Minister.

Table 1:Overview of SilTerra (M) Sdn Bhd (www.silterra.com, 2013)

2.2 ORGANIZATION STRUCTUREChief Executive Officer

Vice President of Finance & Logistic Senior Director Senior Manager Manager

Vice President of Technology Development Director Senior Manager Manager

Senior Vice President of Operating & Engineering Management Senior Director Deputy Director Senior Manager Manager

Operating & Engineering Management

Vice President of Human Resource Senior Manager ManagerVice President of Coperate Development & External Affairs Senior Director

Vice President of Worldwide Sales & Marketing Director Deputy Director Senior Manager Manager

Diagram 1:Organization Chart of SilTerra (M) Sdn Bhd

2.3 COMPANY LOCATION

Headquarter of SilTerra (M) Sdn Bhd is located at Kulim Hi-Tech Park (KHTP), Kedah. KHTP is a high technology science park in the northern part of Peninsular Malaysia and only 36km away from Penang Island. This park has the world-class high quality infrastructure in term of reliable power supply, high capacity fiber optic network and sufficient water supply. Presently, there are many multinational companies already setup their operations in this high technology science park. Besides that, SilTerra (M) Sdn Bhd also has regional offices located in high technology centers around the world to provide local support for their customers.

Figure 1: Location Map of SilTerra (M) Sdn Bhd (www.silterra.com, 2013)

Figure 2: Wafer Fabrication of SilTerra (M) Sdn Bhd (www.silterra.com, 2013)

Figure 3: Wafer Fabrication of SilTerra (M) Sdn Bhd (www.silterra.com, 2013).2.4 AWARD

Diagram 2: IECQ Certificate of ConformityDiagram 3: Certificate of Green Partner

Diagram 4: Prime Ministers Hibiscus Award for Notable Achievement in Environmental Performance for year 2004/2005.Diagram 5: Prime Ministers Hibiscus Award for Notable Achievement in Environment Performance for year 2006/2007

Diagram 6: National Fire Certification.Diagram 7: MS ISO 140001:2004 Certification.

Diagram 8: OHSAS 18001: 2007 Certification

Table 2: Award of SilTerra (M) Sdn Bhd (www.silterra.com, 2013)

2.5 FINANCIAL STATUS

SilTerra (M) Sdn Bhd which under Government Linked Company is control by Khazanah Nasional Berhad. SilTerra (M) Sdn Bhd which is not a publish company does not allow to show annual report because scare be prototypes. Annual report of SilTerra (M) Sdn Bhd is difficult to find for information uses. The annual report of SilTerra (M) Sdn Bhd cannot be finding on bursa saham and through internet. But through article on internet, revenues can be known that earning RM 500 million last year by SilTerra (M) Sdn Bhd. So, without annual report, analysis on financial status on SilTerra (M) Sdn Bhd cannot be done.3.0 INDUSTRIAL PROFILE: PORTERS COMPETITIVE ADVANTAGES

3.1 THREAT OF NEW ENTRANTS

For the semiconductor industry, the new entrants are quite difficult to enter this field. The threat of new entrants for SilTerra (M) Sdn Bhd is low even semiconductor manufacturing is absolutely one of the most noticeable high-technology industries today because of applications of semiconductor products is wide spread (Chen, 2012). The companies need higher investment to start production. For example, SilTerra (M) Sdn Bhd used 1.5 billion in investment and explores wafer technology. Besides that, they also need to buy all the facilities, land, raw material, pays salary to all labor and others. For example, the price of machine in Silterra (M) Sdn Bhd can up to RM10 million for each machines according to Manager of Manufacturing-Training and Enhancement, Ong Boon Teong (Interview 2, 2013).In Malaysia, less company interest to explore this field it is because the process to produce a wafer is very complicated. Based on Senior Member of Technical Staff Industrial Engineering, Mohd Azizi Bin Chik (Interview 1, 2013), the process of production wafer is between 300 steps to 900 steps it is because the company had produced different size of the wafer. Therefore, the new entrant is not easy to copy the wafer. In Malaysia, SilTerra (M) Sdn Bhd is a first manufacturing company to produce high quality of wafer and the customers include local and oversea.Furthermore, competitors are not easy to copy their products. At the company implementing their first design, there is much difficulty balancing the limited funds, changing requirement, and limited resources to make thorough evaluation of required changes (Kumar, 2008). SilTerra (M) Sdn Bhd is very being careful to protect their production line. Although they are allowed visitor walk around the production line but they are not allow visitor take photos. It is because SilTerra (M) Sdn Bhd had invested a lot of modal to their production line and R&D so that they cannot let competitors to know their technology. These prove that the new entrants are not easier to enter in this field.

3.2 THREAT OF SUBSTITUTE PRODUCTS

The main product produce by SilTerra (M) Sdn Bhd is wafer for application Integrated Chips (IC). Customers can send their own designs to SilTerra (M) Sdn Bhd, which then produces finished chips in its wafer fabrication facilities. The products are used in computation, consumer, and communication electronics applications. For example, the IC used for mobile phones, GPS equipment, MP3/4 Personal Media Players (PMP), Digital Camera and other similar applications. The wafers are available in sizes from 150mm to 300mm based on old revolution stages while SilTerra (M) Sdn Bhd already update to 450mm based on new revolution stages (Interview 1, 2013). Besides that, there are many types of wafer that produced by different metal which are silicon, aluminum and copper. SilTerra (M) Sdn Bhd is the first semiconductor wafer fab in Malaysia. For now, the products produce by Silterra (M) Sdn Bhd still does not have any substitute products.

3.3 BARGAINING POWER OF BUYERS

Bargaining power of customers represents that force affecting intensity to compete with others company within an industry when customers have focused or high in sale price or buy in huge volume. Most of the products of SilTerra (M) Sdn Bhd are shipped to the US, Taiwan and South Korea with each 25% be received even they also had local customers but in a least of number (Interview 1, 2013). This is because the products of SilTerra (M) Sdn Bhd that meet demanding customers by serves them from fables to IDM in highly dynamic consumer electronics and communication application have high demand in foreign market compare to the local market. Besides that, SilTerra (M) Sdn Bhd also supplies contract manufacturing services which mean that customers can send their own design to SilTerra (M) Sdn Bhd then they will produce finished chips in its wafer fabrication facilities. After producing finished chips, SilTerra (M) Sdn Bhd will ship to their customers for producing their products. So, customer requirements can be satisfy which can provide SilTerra (M) Sdn Bhd to gain trust of customers and earned profits.Furthermore, loyalty of customers makes the SilTerra (M) Sdn Bhd products survive and the main customer is from China. Nowadays, China has a lot of assembly factories so that it needs a lot of semiconductor products to their production line. SilTerra (M) Sdn Bhd is also able to compete in competitive global. Total production wafer of SilTerra (M) Sdn Bhd is at rank 15 within global (www.silterra.com, 2013).SilTerra (M) Sdn Bhd has higher bargaining power of buyers, this is because customers of SilTerra (M) Sdn Bhd be focused by them (Interview 1, 2013). Besides that, customers that involved with them are buying in huge volume on high sale price.

3.4 BARGAINING POWER OF SUPPLIERS

Market of input for SilTerra (M) Sdn Bhd is equal to the bargaining power of suppliers. This mean that availability input that received has to depend on the relationship between suppliers. So, SilTerra (M) Sdn Bhd has to maintain good relationship with their suppliers. SilTerra (M) Sdn Bhd has more than one hundred suppliers which are local and foreign suppliers (Interview 1, 2013). Within the suppliers, Singapore and Japan is supplier that provided the main raw material to produce a wafer which is silicon, aluminum and copper.Customers where increasingly demanding had caused for search supplier who can supply quality products and excellent service to improve profitability and competitiveness (Yeh, 2011). Mostly, the main raw materials are imported from foreign countries. Since that our country difficult to get the supplier that provides this kind of main raw materials (Interview 1, 2013). So, the bargaining power of suppliers is high. Besides that, SilTerra (M) Sdn Bhd has to order the main raw materials in high quantities. This is because the market requirement on product SilTerra (M) Sdn Bhd is high. Moreover, times that need to take main raw materials from Singapore and Japan to SilTerra (M) Sdn Bhd are being long. Lead time for SilTerra (M) Sdn Bhd to receive the main raw materials from their suppliers is around one month (Interview 1, 2013).SilTerra (M) Sdn Bhd will harden to deliver on time to the customers if out of expectation lead time with supplies raw material. Furthermore, SilTerra (M) Sdn Bhd need to pay high monetary to import main raw material from Singapore and Japan. SilTerra (M) Sdn Bhd has high bargaining power of supplier(Interview 1, 2013). This is because the main supplier of SilTerra (M) Sdn Bhd is located in Singapore and Japan. So, SilTerra (M) Sdn Bhd has to more concentrate on them.

3.5 COMPETITIVE RIVALRY EXISTING WITHIN AN INDUSTRY

SilTerra (M) Sdn Bhd has competitor in an industry but their most of competitors are located in foreign countries and fewer competitors in local. SilTerra (M) Sdn Bhd has to compete with South Korean and Taiwanese wafer fabs to win customers (Interview 1, 2013). To compete with their competitors, SilTerra (M) Sdn Bhd apply strategies that provided high-quality products and top-notch service with very quick turnaround time which deliver leading-edge products to customers in record time. SilTerra (M) Sdn Bhd has to achieve short cycle times, keep low levels of inventory, achieve high throughput under lowest investment and maintain flexibility of production line to keep high competitive advantage (Tu & Chen, 2010). Moreover, SilTerra (M) Sdn Bhd also has to compete with Chartered Semiconductor of Singapore, Taiwan Semiconductor Manufacturing Co. (TSMC) which is the overall industry leader on Taiwan (Byrne, Kovak & Micheals, 2013), and United Microelectronics Corp., both of Taiwan on technology. The capacity of SilTerra (M) Sdn Bhd is cannot fully satisfy the demand of customers compare to competitor in foreign countries due to less competitive advantages. This is because of late behind rival on new technology application being applied in SilTerra (M) Sdn Bhd. To solve the problem, SilTerra (M) Sdn Bhd expands their factory and installs equipment(Interview 1, 2013).Compete wafer technology with competitor had make executed manufacturing become more and more complex (Kader& Azizi, 2010). In addition, equipment had been used by SilTerra (M) Sdn Bhd to produce products is expensive which affecting manufacturing cost became very high. This is because to produce a wafer needs high-technology machines and engineer to control the process. According to CEO, Dr Kamarulzaman Mohamed (Interview 4, 2013), he has seen that economies of scale and has a good cost structure are suitable to apply.If successfully apply, they are able to compete with rivals within an industry.As a conclusion, SilTerra (M) Sdn Bhd has low competitive rivalry existing within an industry because SilTerra (M) Sdn Bhd has lack of capacity to meet demand of customers (Interview 1, 2013).

4.0 PESTAL ANALYSIS

4.1 POLITICS FACTOR

SilTerra (M) Sdn Bhd is a factory fully controlled by the Malaysian government. Stock ownership also is 98% owned by Khazanah Nasional Sdn. SilTerra (M) Sdn Bhd is one of the companies that responded to the minimum wage adjustment of RM900 to their employees. Wage adjustment is implemented due to the cost of living is increasing year by year. In addition, currency exchange reduced in Malaysia was less influenced SilTerra (M) Sdn Bhd because all employees are Malaysian. Besides that, production hours of SilTerra (M) Sdn Bhd has changed from 8hours per day into 24hours per day and divided into 3 shifts. It is operating7 days in a week. This is because they are striving to increase the capacity to meet the demand (Interview 1, 2013)In SilTerra (M) Sdn Bhd, it would not affect the sales of wafers if there have a change on political at Malaysia. This is because demand of the wafer for global market is high. For example, wafer produced by SilTerra (M) Sdn Bhd issued to produce mobile phones and computers. At present, production of the products is on large quantity and consist variety of models. Thus, the capacity of wafer generated by SilTerra (M) Sdn Bhd is high. In the event of political change in others countries, it will lead them to become major customers of SilTerra (M) Sdn Bhd. So, politics changed in other countries will affect the production of wafer on SilTerra (M) Sdn Bhd.In terms of government taxes, SilTerra (M) Sdn Bhd is ordinary taxable. It is same with other manufacturers. Customers of wafer issued by Silterra (M) Sdn Bhd area broad, for example countries China, United States, Taiwan, Korea, and Singapore(Interview 1, 2013). The export taxis different for each country.4.2 ECONOMIC FACTOR

In the economic element, SilTerra (M) Sdn Bhd is looking the current global economic to ensure they are always in running well and growing rapidly in the Wafer Fabrication Industry. SilTerra (M) Sdn Bhd has always observing raw material prices, currency exchange rate, and observes the effects of inflation or economic recession. SilTerra (M) Sdn Bhd is facing shortage of raw materials and prices of raw materials supply (Interview 1, 2013). Due to economic conditions and fuel prices at uncertain world, SilTerra (M) Sdn Bhd had to face with rising prices of raw materials such as silicon, aluminum and copper. The raw materials are mostly imported from Singapore and Japan (Interview 1, 2013).In addition, SilTerra (M) Sdn Bhd is always concerning in global exchange rate. For example, if the price of the U.S. dollar is lower, SilTerra (M) Sdn Bhd will buy raw materials in large quantities. This is because the price is cheaper compare with normally. Thus, it is able to increase the revenue.Total sales of SilTerra (M) Sdn Bhd are also increasing due to their wafers are used to produce high-tech products. For example, hand phone, television, camera and USB. China and Taiwan have a high demand on the product of SilTerra (M) Sdn Bhd. This is because their products are able to produce hi-tech products, such as mobile phones and computers. As we all know, China is a manufacturer to produce a variety of mobile phone and they are using IC or micro-chip to produce mobile phones. Therefore, it made SilTerra (M) Sdn Bhd becomes a micro-chip supplier for some industries in China (Interview 1, 2013).

4.3 SOCIAL FACTOR

For the social element in SilTerra (M) Sdn Bhd, it is emphasized their responsibility to their employees. The responsibilities of SilTerra (M) Sdn Bhd can be seen through several aspects which are in relation to the payment of wages, workers compensation and panel clinic for employees and their employees family members.Reasonable salary and benefits for workers which is under social responsibility need to be implemented by SilTerra (M) Sdn Bhd. So, SilTerra (M) Sdn Bhd has given reasonable salary and benefits to their employees to let them satisfied with the management. An example of compensation prepared by SilTerra (M) Sdn Bhd is covering compensation end of work services such as retirement of employees.Besides that, SilTerra (M) Sdn Bhd also has served on several panels clinics around the working area and residential hall areas workers for them when accidents had happened on them surrounding those areas(Interview 1, 2013). Panel clinic services are essential to maintaining the quality of services provided by SilTerra (M) Sdn Bhd. It is to facilitate their dealings with their own employees in the event of any accident or for specific treatments. Services provided by the clinic panels to SilTerra (M) Sdn Bhd for employees is free of charge.Moreover, SilTerra (M) Sdn Bhd also has organized several society activities such as futsal tournament and annual dinner for their workers (Interview 1, 2013). This method will further strengthen the relationship between the employee and the employer. Furthermore, employees will feel more fun and they will release their stress where come from their job.In addition, SilTerra (M) Sdn Bhd also does corporate social responsibility activities. For example, they provided several visits to other parties. SilTerra (M) Sdn Bhd provided visit for various parties such as lectures and students from the USM, UUM and others (Interview 1, 2013). Silterra(M) Sdn Bhd also collaborates with local residents to boost social activities for keeping green environment in surrounding SilTerra (M) Sdn Bhd.

4.4 TECHNOLOGY FACTOR

SilTerra (M) Sdn Bhd has use CMOS Logic technology which is match to process on the leading foundry, these processes covering from 180nm node to 110nm node. Besides that, it is also running on high volume production. CMOS logic technology provides an optimal combination of performance in terms of power, speed and gate density to meet stringent product requirements on consumer, communications and computing applications. More than 35% of the process was reentrance at the same equipment while CMOS process usually consists of hundreds of processing equipment (Ridzuan et al., 2013). Low Power or High Voltage CMOS Logic technology that used by SilTerra (M) Sdn Bhd is for digital processors used in portable consumer applications (www.silterra.com, 2013).High Voltage technology which used by SilTerra (M) Sdn Bhd is unique developed to ultra-low leakage devices with process design rules that more stringent process which specifically target for AMOLED or TFT Display Driver application used on display panels in portable consumer applications (www.silterra.com, 2013).SilTerra (M) Sdn Bhd has 180nm, 160nm and 130nm of Mixed Signal and RFCMOS technology platform that built from proven CMOS Logic platform with additional active and passive RF or analog components. This RF or analog components have high precision MIM (Metal-Insulation-Metal), Finger Capacitor, Varactor, Diode, Thick Metal Inductors, Deep Nwell, Multi-Voltage and High precision resistors with up to 20GHz range characteristics. This technology is suitable for applications of RF or analog which used in WLAN, Bluetooth, RFID, Zig Bee applications (www.silterra.com, 2013).SilTerra (M) Sdn Bhd also has developed on 180nm of BCDMOS and 180nm of V-Tr Power MOSFET technology for the application of energy-efficient power management to meet the expectations on industry GREEN energy. This technology is suitable for applications used in LED drivers, motor drivers, DC-DC converters and Lithium battery charger (www.silterra.com, 2013).With all technologies that apply on SilTerra (M) Sdn Bhd, we can see that high technologies are used by SilTerra (M) Sdn Bhd. This can caused SilTerra (M) Sdn Bhd has competitive advantages that enable them to compete with competitors.

4.5 ENVIRONMENT FACTOR

SilTerra (M) Sdn Bhd is committed to designing, manufacturing and distributing products and processes which optimize resource utilization and minimize environmental impact. Silterra (M) Sdn Bhd is always maintaining an environmental management system which continuously strives to improve its environmental performance. For the certification of International Organization Standardization (ISO), SilTerra (M) Sdn Bhd has ISO 9001, ISO 9002, and ISO 14001- Environmental Management System (EMS). SilTerra (M) Sdn Bhd was implementing an EMS to improve their environmental performance in August 2012(www.silterra.com, 2013).Besides that, the facilities of SilTerra (M) Sdn Bhd are equipped with wastewater treatment and exhaust systems that ensure compliance with environmental, health and safety regulations in the workplace (www.silterra.com, 2013). SilTerra (M) Sdn Bhd ensure compliance with stringent international and local environmental protection regulations on industrial effluents and air emissions through wastewater treatment systems to treat segregated waste streams from manufacturing and support systems, Volatile Organic Compound (VOC) abatement systems and high efficiency scrubber systems to remove acid and caustic chemical vapors. In addition, scheduled (toxic) wastes are managed to comply with stringent regulatory requirements (www.silterra.com, 2013).

4.6 LEGAL FACTOR

The raw materials that SilTerra (M) Sdn Bhd used for making wafer fabrication are silicon, aluminum and copper. SilTerra (M) Sdn Bhd is continuously working on reducing the use of banned substances in their final products. In line with SilTerra (M) Sdn Bhds Hazardous Substance Process Management, SilTerra (M) Sdn Bhd is on regular basis sending their product to accredited laboratory to be independently analyzed. This is because to ensure the products do not contain or exceed the hazardous substance concentration limit as stated in Restriction of Hazardous Substances (RoHS), Registration, Evaluation, Authorisation & restriction of Chemical (REACH) and Sony Green Partner(www.silterra.com, 2013). RoHS is a regulation that eliminating identified environmentally unfriendly compounds from the manufacturing process. So, SilTerra (M) Sdn Bhd used RoSH regulation to restrict certain dangerous substances commonly used in electronic and electronic equipment (www.silterra.com, 2013). What is REACH? REACH is a European Union regulation concerning the Registration, Evaluation, Authorization and restriction of Chemical to provide a high level of protection of human health and the environment from the use of chemicals and make the people who place chemicals on SilTerra (M) Sdn Bhd manufacturing responsible for understanding and managing the risks associated with their use. 5.0 ORGANIZATION STRATEGIES

5.1 CORPORATE STRATEGY

5.1.1 ECONOMIC SCALE AND BETTER COST STRUCTURE

Economic scale and a better cost structure wish to be implemented by SilTerra (M) Sdn Bhd to reduced cost of manufacturing for produced wafers (Interview 4, 2013). According to Reid & Sanders (2010), economies of scale are a condition in which the average cost of a unit produced is reduced as the amount of output is increased. Cost of manufacturing will be in high amount because of machine that used by SilTerra (M) Sdn Bhd is high on technology. To gain more profits, SilTerra (M) Sdn Bhd tends to reduced cost of manufacturing and increased amount output with do not have enough capacity on production. Besides that, SilTerra (M) Sdn Bhd which needs to compete with competitors has to increase number of output so can fulfill customer requirement based on unexpected extra order.

5.1.2 INVEST LARGER AMOUNT INTO R & D

The another corporate strategy of SilTerra (M) Sdn Bhd is invests into R&D which collaborate with Research in Engineering, Science and Technology (CREST) that support some SilTerra (M) Sdn Bhd program and sharing information related to academia to industry. Investment on R&D can be make revenue of SilTerra (M) Sdn Bhd comes up to around 20% (Interview 4, 2013). SilTerra (M) Sdn Bhd has to make invest on R&D to make new product because for meet demand of different customers. So, SilTerra (M) Sdn Bhd can be continuous business and stable on market. Product demand that very volatile and machine and process technologies that advance on rapid pace are caused capacity planning and investment become challenging task (Chou, Cheng & Liang, 2006).

5.2 BUSINESS STRATEGY

5.2.1 COST LEADERSHIP

According to Capon (2008), cost leadership is likely to be achieved by economics of scale, extremely efficient production or very efficient distribution processes. SilTerra (M) Sdn Bhd which is a company produce wafers for chips used that need many knowledge and expertise in the process for wafer production. Besides that, SilTerra (M) Sdn Bhd also required costly and largely equipment to produce wafers (Interview 1, 2013). Moreover, more major raw materials that SilTerra (M) Sdn Bhd used to produce wafer are coming from other countries which is need high transportation cost. So, SilTerra (M) Sdn Bhd produces out products which on higher prices. This is because of the cost of manufacturing wafer is very high. Furthermore, SilTerra (M) Sdn Bhd produce products in low volume whatever SilTerra (M) Sdn Bhd have fully utilized capacity until overcapacity which employee overtime. In addition, to reduce increases volume of products, SilTerra (M) Sdn Bhd has to expanded new factory to increase the production line for produce high volume of products (Interview 1, 2013). With the new factory, SilTerra (M) Sdn Bhd is able to buy more equipment to increase their manufacturing capacity. So, high volume of products can be produced by SilTerra (M) Sdn Bhd. By this way, SilTerra (M) Sdn Bhd have increased volume of products with reduced much of manufacturing costs by reduced employee overtime.Besides that, Silterra (M) Sdn Bhd also can reduce manufacturing cost and increased volume of product by having good relationship with partners. Partners which are same industry with SilTerra (M) Sdn Bhd have provided some information about wafer technology that can help SilTerra (M) Sdn Bhd to produce wafer with productivity. Besides that, SilTerra (M) Sdn Bhd can also reduce manufacturing cost for produce wafer by taking one of part on produce wafers with partners (Interview 1, 2013). So, SilTerra (M) Sdn Bhd can reduce time and manufacturing costs to produce that part on produce wafer with direct go through other parts to produce wafer.

5.2.2 RAPID RESPONSE (NEW PRODUCT DEVELOPMENT)

Nowadays, the semiconductor industry is becoming more competitive. Since technology keeps advancing, SilTerra (M) Sdn Bhd has to produce chips that smaller than before to applicant on computation, consumer and communication electronics. So, SilTerra (M) Sdn Bhd has the Research and Development (R&D) that develop their product to become smaller and quality. Success in fables world requires a transformation of management methodologies used in the development and implementation of ICs (Kumar, 2008).Furthermore, R&D on SilTerra (M) Sdn Bhd has a good performance on development their product to survival on the advanced technology. For example, SilTerra (M) Sdn Bhd has produced chips that customers need on 0.25-micron in 2001 year. When in 2002 year, SilTerra(M) Sdn Bhd has improved their ability to produce 0.22-micron chips. It can be seen that the ability of SilTerra (M) Sdn Bhd to produce smaller chips has intended year by year. Until a recent year, SilTerra (M) Sdn Bhd already has the ability to produce 0.13-micron chips (www.silterra.com, 2013). SilTerra (M) Sdn Bhd has become not enough capacity to produce products for customers based on the requirements and needs of customers are increasing day by day(Interview 1, 2013). So, SilTerra (M) Sdn Bhd has to made investment to install more equipment and expand their factory. With this solution, SilTerra (M) Sdn Bhd will have sufficient capacity to fulfill the needs and requirements of customers.Moreover, SilTerra (M) Sdn Bhd also has outsourcing from other companies in the same industry. This is because SilTerra (M) Sdn Bhd needs to gain more information on new technology from other companies. So, they will not lag behind their competitors. Since that SilTerra (M) Sdn Bhd always keeps up with the latest technology (www.digitalnewsasia.com, 2013).

5.3 FUNCTIONAL STRATEGY

5.3.1 FINANCE

Khazanah Nasional Berhad is a sovereign wealth fund of the Government of Malaysia specializing in investments on finance, telecommunications, media and communications services, utilities, information technology, healthcare, education, renewable energy, creative economy, sustainable development and transportation sectors (www.khazanah.com, 2013). Khazanah Nasional Berhad is the investor of SilTerra (M) Sdn Bhd. 98% of SilTerra (M) Sdn Bhd is owned by Khazanah Nasional Berhad. To ensure the company operates smoothly, SilTerra (M) Sdn Bhd needs a large number of capitals to continue the business. This is because one of the machines in the fab is costly around RM 10 million (Interview 2, 2013).

5.3.2 HUMAN RESOURCE

SilTerra (M) Sdn Bhd has around 1200 employees. Due to the task in operation department need specific skills, all the workers are trained before start working (Interview 1, 2013). Besides that, human resource department on SilTerra (M) Sdn Bhd also provides a training program for the fresh graduates. Training program that implemented by SilTerra (M) Sdn Bhd is (SGTP). SilTerra (M) Sdn Bhd Graduate Trainee Program (SGTP) is a program designed for fresh graduates to gain hands-on-training and expose to a full fledge semiconductor working environment (http://foe.mmu.edu.my/, 2013). To recruit more employees on SilTerra (M) Sdn Bhd for increase capacity for production, human resource department of SilTerra (M) Sdn Bhd has apply jobstreet.com as their way to offer job vacancies.5.3.3 RESEARCH AND DEVELOPMENT (R&D)

Functional strategy is the approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity. In the SilTerra (M) Sdn Bhd, Research & Development (R&D) is the one of the strategy to make the organization on the competitive advantage level to achieve their goal. The R&D strategies are feature and quality driven, design for product performance, improve existing product in the market and cost driven which design for cost reduction. Besides that, transformation strategy also is a part of R&D strategy which is SilTerra (M) Sdn Bhd making their transformation due to capacity improvement and efficiency expertise. For example, SilTerra (M) Sdn Bhd have their capacity to produce average output of 30000 unit wafers per month, for average of 2500 mold per wafer, more than 75 million chips produce every month and now SilTerra (M) Sdn Bhd expanded it into full capacity and has consistent full utilization for their company production(Interview 1, 2013). Besides that, the company currently has two fabs which are Silterra (M) Sdn Bhds Fab 1 and a fab Infineon building on land adjacent to company. For the technology advanced, SilTerra (M) Sdn Bhd and their collaboration partnership, ProMOS Technologies has offered High-Voltage (HV) technology for smartphone market. The first joint technology development project bring SilTerra (M) Sdn Bhd's 0.13-micron and 0.11-micron High-Voltage (HV) process technology for small-panel LCD driver IC applications to ProMOS's 12-inch fabrication facilities in Taichung, Taiwan. Moreover, this project marks the first step of the long-term strategic partnership between ProMOS and Silterra (M) Sdn Bhd to leverage on each other's strength to bring together ProMOS's 12-inch production scaleand advanced manufacturing capabilities and SilTerra (M) Sdn Bhds advanced HV technology to enable the fast growing smart phone market. So, this project is a significant breakthrough for SilTerra (M) Sdn Bhdas it enables us to continue to deliver new innovations and capacities to their customers to win in the market (www.silterra.com, 2013).

5.3.4 OPERATION

SilTerra (M) Sdn Bhd which is produced wafer needs high technology machines and expertise employees. This is because process flow of wafer is very complexity which consists step range from 300 to 900 steps and needed more than 500 equipments within cycle time varies from 30 to 100 days (Azizi & Hazmuni, 2010). To make sure that operation of SilTerra (M) Sdn Bhd is running on efficiency, employees on SilTerra (M) Sdn Bhd had to have knowledge on process flow of wafer. Process Flow to produce Wafer ICRaw Material

Raw Materials

1. According to Senior Manager of Industrial Engineering, Mohd Hazmuni bin Saidin (Interview 3, 2013) wafers are producing from raw materials. The raw materials used by SilTerra (M) Sdn Bhd are aluminum, copper and silicon. 2. The aluminums derived from suppliers are cut according to the size desired by SilTerra (M) Sdn Bhd. 3. Most of the raw materials used to produce wafer are import from other country such as Korea and Singapore.

Step 1 : Diffusion

1. A layer of material is grown or deposited on the surface of a cleaned wafer (Monch, Fowler & Mason, 2013). 2. Diffusion is a high temperature process that disperses material on the wafer surface (Monch, Fowler & Mason, 2013). 3. In this process, wafers will place in the oven, the contents of the atoms and ions act to produce electrical characteristic in the wafer. 4. Diffusion is similar to oxidation; the difference between these two processes is diffusion uses different gases while oxidation just uses oxygen.

Step 2: Photolithography

1. Photolithography can be known as optical lithography or violet lithography. It uses light to transfer a geometrix pattern from a photomask to a light-sensitive chemical photo resist on the substrate (www.wikipedia.com, 2013).2. Coating, exposure, developing, and process control are the main steps of the photolithography process (Monch, Fowler & Mason, 2013). 3. First, the wafer is coated with a thin film of a photosensitive polymer, called photoresist strip (Monch, Fowler & Mason, 2013). Coating is applied while the wafer is spinning. 4. Exposure tools, which called steppers, transfer the pattern onto the wafer by projecting projecting light through the reticle to expose the wafer using ultraviolet light (Monch, Fowler &Mason, 2013).

Step 3: Etching

1. This step is responsible for removing material from the wafer surface. Areas on the wafer that are not covered by photoresist strip are then removed from the wafer. 2. There are two methods of etching: wet etching and dry etching. 3. For wet etching, chemicals are used to remove the top layer of the wafer. 4. Usually wet itching required in micro electromechanical where the structure should be free from lying layer. 5. Dry itching refers to any of the methods of etching that use gas instead of chemical etchants. Dry itching is capable of producing critical geometries that are very small ( Bates, 2000)

Step 4: Implant

1. In implantation process, the ion implant is very important to produce a wafer or Integrated Circuit (IC). 2. The implantation process needs arsenic, phosphorus, boron, boron, indium, antimony, germanium, silicon, nitrogen, hydrogen, and helium to produce the wafer implant. 3. It is a method performs doping impurities into wafer. The ion particles are through a high electrical field to implant into wafer. 4. It must be perform with electric field. Because electric field can accelerate ions and its let ions having kinetic energy. Besides that, the penetration depth is depends on kinetic energy. 5. This process is used to change the physical, chemical, or electrical properties of the solid.

Step 5: Chemical- mechanical polishing (CMP)

1. This step cleans and levels the wafer surface. Chemical slurry is applied to a wafer and the surface is equalized. This result in the thickness of the wafers being diminished before adding a new layer (Monch, Fowler & Mason, 2013). 2. Processes such as etching, deposition or oxidation which changes the surface of wafer lead to non-planar surfaces. CMP used for plain wafer surface by using the chemical slurry (Interview 3, 2013). 3. CMP allows pattering indirectly, because removal of material always starts at the top wafer surface. Along with non-planar layer deposition, CMP is an effective method to construct the IC structure.

Step 6: Thin Film

1. Thin film is a layer of material ranging from fractions of a nanometer to several micrometer in thickness (www.wikipedia.com, 2013)2. Thin films are used in wafer because it can be resistors, conductors, insulators or semiconductors.3. The use of thin films will be installed on the wafer with the same chemical composition.

Final Product

1. Final products of Silterra (M) Sdn Bhd are available in three type of size: 6, 8 and 10 inches.

6.0 STRATEGY ANALYSIS

6.1 SWOT ANALYSIS

Strengths (S)Weaknesses (W)

S1. High technologyS2. Multi skill workersS3. Good maintenanceS4. Just- In- TimeS5. Strategic locationW1. High operating costW2. Lack of financial investmentW3. Lead time of raw materialW4. Lack of production lineW5. Do not have diversity product

Opportunities (O)Threats (T)

O1. Good relationship with partnerO2. Expansion of new factoryO3. Technology advancedO4. Technology innovationO5. Future market volume demandT1. Rapid technology changeT2. Unfavorable lawT3. Exchange rateT4. Geographical Distribution T5. Sustainability of major raw material

Strength

S1. High technologySilTerra (M) Sdn Bhd used high technology to produce high quality product to the customer. CMOS Logic technology, High Voltage technology and Analog technology is the examples for high technologies that SilTerra (M) Sdn Bhd used when process wafer (Interview 1, 2013). SilTerra (M) Sdn Bhd also has around 400 machines in high technology to produce quality wafers (Interview 1, 2013). SilTerra (M) Sdn Bhds CMOS Logic technologies are process-matched to the leading foundry to provide optimal combination of performance in term of power, speed and gate density, to meet the stringent product requirement in Consumer, Communication and Computing applications while High Voltage technology is able to support high memory density requirement with low leakage current. This technology is supported by complete standard cell library, configurable SRAM macro block, I/O and One-Time-Programmable IP (www.silterra.com, 2013). SilTerra (M) Sdn Bhd also known as logic technology leadership and CMOS technology leadership that leading foundry compatible processes which have high volume production, high performance and provide high quality design kits.

S2. Multi skills workersSilTerra (M) Sdn Bhd has educated and multi skill workers that graduated in certain fields such as Industrial Engineering (IE), Computer Science and IT Engineering, Electric and Electronic (EE), Micro Electronic Engineering and more (Interview 1, 2013). There are two categories around 1200 employees in SilTerra (M) Sdn Bhd which is 83 % of technical worker and 17% of non-technical worker. The definition of multi skill is broad on SilTerra (M) Sdn Bhd because it is not focused on technical skills only but its also including emotional control with environment around company (Interview 1, 2013). Training development workers is one of continuously improvement of efficiency. SilTerra (M) Sdn Bhd will give training to their worker in one to three years to know the process, how to use tools and equipment and how about expertise in the area discovery method such as identification of problem, how to solve and improve it and that training will develop workers skills. For example, from operator, worker will be a senior engineer which has supervision skills to conduct people (Interview 1, 2013).

S3. Good maintenanceSilTerra (M) Sdn Bhd has a good maintenance to keep their machines full operating and functioning all the time. This company has their own preventive maintenance where the worker will monitor the state of machines every weekly as purpose to prevent machine from getting breakdown during operating time. For example, SilTerra (M) Sdn Bhd has weekly serves maintenance on every Sunday to make sure the condition of machine well and on control. When SilTerra (M) Sdn Bhd faced machine breakdown or equipment interruption problem, the machine will be improved as soon as possible within half a day using manual as a guideline that known as Failure Defect Analysis (Interview 1,2013).

S4. Just-In-Time (JIT)Just-in-time manufacturing is the one of advantage to the SilTerra (M) Sdn Bhd because the purpose of JIT is to meet customer demand as well as avoid the waste associated with overproduction or excess inventory. SilTerra (M) Sdn Bhd only making what is needed, when wafer is needed and how much amount that wafers is needed based on customer demand to eliminated waste and improves productivity (Interview 1, 2013).Because of JIT, request of customers to meet time-to-market many need to be update through production plan which constructed by production planning department with negotiation with sales department(Chung et al., 2008). So far SilTerra (M) Sdn Bhd does not have adequate capacity because their customer demand is more than production capacity.

S5. Strategic locationStrategic decision for location is the most important for any company as well as SilTerra (M) Sdn Bhd that corporate headquarters and manufacturing facilities are strategically located at Kulim High-Tech Park KHTP). SilTerra (M) Sdn Bhd located in an industrial area with other current tenant at Kulim High-Tech Park such as Infineon, First Solar, Toyo Memory and more. The reason why SilTerra (M) Sdn Bhd has a strategic location for semiconductor manufacturing because at KHTP has high quality infrastructure including reliable power supply, Malaysian Cybercity status, high capacity fiber optic network and abundant water supply from three dedicated reservoirs.Besides that, according to the Malaysias map, SilTerra (M) Sdn Bhd is located at the centre of the Northern Region in Kedah Darul Aman that very close to the North Butterworth Container Terminal and Bayan Lepas International Airport. It means that Silterra (M) Sdn Bhd can runs activities import and export with their suppliers and customers in an easy way while reducing cost for long distance transportation.

Weakness

W1 High operating costSilterra (M) Sdn Bhd which is a high tech company that produces wafer as their products. To produced wafers, high knowledge and expertise employees is needed to hire by SilTerra (M) Sdn Bhd. So, salary those give for who high knowledge and expertise employee is high. Besides that, machine that used by Silterra (M) Sdn Bhd also need to be high tech technology. To buy machines for production, SilTerra (M) Sdn Bhd need huge amount of money. This is because one of 400 unit machines for produced wafers in SilTerra (M) Sdn Bhd is around and more than RM 10 million (Interview 1, 2013). Moreover, more of raw materials that used by SilTerra (M) Sdn Bhd is import from foreign country (Interview 1, 2013). So, price of raw materials which purchased by SilTerra (M) Sdn Bhd is high. This because of raw materials that from foreign country need high transportation cost. With high transportation cost, price of raw materials become high. Based on salary of employees are high, machines that used in high cost and price of raw materials are high, operating cost for SilTerra (M) Sdn Bhd produced wafers are high.

W2 Lack financial investmentSilTerra (M) Sdn Bhd which is a government linked company that action and capital is under control of government (Interview 1, 2013). Khazanah Nasional Bhd has investment 98% on SilTerra (M) Sdn Bhd. So, Khazanah Nasional Bhd has high control on financial of SilTerra (M) Sdn Bhd (Interview 1, 2013). To because of high control on financial, SilTerra (M) Sdn Bhd had been limited to low capacity where capacity is lower than market demand. SilTerra (M) Sdn Bhd which financial be control caused they cannot invest high and new machine for increased capacity.Besides that, SilTerra (M) Sdn Bhd which control by Khazanah Nasional Bhd on financial has low percentage on profit. This is because profit which earned by SilTerra (M) Sdn Bhd had to divide with their investor who is Khazanah Nasional Bhd based on percentages that invest on them (Interview 1, 2013). By this way, process of improvement on SilTerra (M) Sdn Bhd will be slowdown within capital that limited.

W3 Lead time raw materialSilTerra (M) Sdn Bhd had faced on problem that suppliers who delivery their raw materials do not on time which they needed for production (Interview 1, 2013). Suppliers of SilTerra (M) Sdn Bhd who supplier raw materials for them have to take a period of time on delivery from suppliers there to SilTerra (M) Sdn Bhd. This is because more of major raw materials are getting from foreign country. Besides that, delay delivery time of raw materials arrived on SilTerra (M) Sdn Bhd can be caused by natural disaster when on the way that delivery to SilTerra (M) Sdn Bhd with transportation. SilTerra (M) Sdn Bhd needed to make order with their suppliers one week before needed with quantities which had been confirmed (Interview 1, 2013). So, SilTerra (M) Sdn Bhd will be faced difficult to get raw materials for produced products as extra order is occur unexpectedly. SilTerra (M) Sdn Bhd will outsource others company for produced products that need by extra orders which unexpectedly as SilTerra (M) Sdn Bhd do not have raw materials to produce which extra orders (Interview 1, 2013).

W4 Lack of production lineSilTerra (M) Sdn Bhd which produced wafer has high demand on their product. This is because market demand on mobile phone, computer, USB, camera and others technology products are high. With high market demand on those technology products, demand on application chips that produced by wafer on those technology products also increased. So, demand on wafer of SilTerra (M) Sdn Bhd also increasing. SilTerra (M) Sdn Bhd has production line that do not enough for they to produce wafers which high market demand (Interview 1, 2013). Because of lack of production line, SilTerra (M) Sdn Bhd which capacity for produce products are under demand caused SilTerra (M) Sdn Bhd loss on their profits (Interview 1, 2013). SilTerra (M) Sdn Bhd will also outsource others company to produce products that out of their capacity for produced with the lack of production line. So, SilTerra (M) Sdn Bhd needs to pay for which product that they have outsourced from others company.

W5 Do not product diversificationSilTerra (M) Sdn Bhd under investment of Khazanah Nasional Bhd only provided different thinness of wafer and types of wafer that used to produce chip for mobile phones, computers, USBs and cameras aimed at fulfill customer demands (Interview 1, 2013). SilTerra (M) Sdn Bhd does not provide others kind of products beside wafers which are main kind of products and only one kind of products. All 400 unit machines that consist on SilTerra (M) Sdn Bhd are used to produce wafer because they only produce one kind of products which are wafer (Interview 1, 2013). If one of a day, many companies are occurs in industry that same with SilTerra (M) Sdn Bhd. SilTerra (M) Sdn Bhd will not be able to compete to others company which at same industry. This is because of SilTerra (M) Sdn Bhd does not have diversity products. Without provided diversity products by SilTerra (M) Sdn Bhd, they will not be able to continuous business when wafers has be replaced by new innovation products which occur on next revolution of technology in future.

Opportunities

O1. Good relationship with partnerSilTerra (M) Sdn Bhd needs to always upgrade their products to fulfill customer needs. If SilTerra (M) Sdn Bhd without any partner then they will be hard to survive in this industry. Wafer technology is an industry that continuously improves the product. Compare in the past, nowadays the IC is becoming smaller than smaller. SilTerra (M) Sdn Bhd has built a network of highly qualify Design Service with companies to provide good design to meet the outsourcing needs of their customers. SilTerra (M) Sdn Bhd has 8 design partners such as Symmid Corporation Sdn. Bhd., IPGoal Microelectronics (Sichuan) Co.,Ltd., UNIVE, Key ASIC, DS, Silicon Artist Technology Corporation, ESSEENSIUM and Think Silicon Ltd. Company Management. Through these 8 partners, they are able to exchange information to intend their own wafer technology. This is because wafer technology is a technology that needed to always improve and up with the times (www.silterra.com, 2013).

O2. Expansion of new factoryDemand of the wafer in the market is increasing year by year. Nowadays is moving to technological era, so that wafer technology will become more important in the future. A lot of products needs wafer. For example, hand phone, camera, and television and so on. Besides that, Wafer technology is a less competitive market so that they should be expanded before the market become market saturation. Furthermore, industry needs a lot of modal and should understand those kind of technology before enter this field. SilTerra (M) Sdn Bhd plans to expand their manufacturing plant in the future. This is because nowadays they facing low capacity compare with global markets. Low capacity causes they needed to sub-contract to X-Fab Sarawak. This method is to retention customer if not it will let customers feel an inability to produce enough wafer. But this method is a good method to solve the short-term low capacity. So that, their plans to expand new factory to solve low capacity problems (Interview 1, 2013).

O3. Technology advancesUser friendly website is a website which easy to use for users by providing full information through the internet. This can give pleasant and satisfying to the user. By this way, the company can improve their sales when visitors have a good experience will be inquiries for more information and finally make a decision to order the products.SilTerra (M) Sdn Bhd has own website and Facebook. This method is able to help them provide information, latest news and a list of products. So that, the customers are easier to understand products and operate of SilTerra (M) Sdn Bhd. Besides that, Silterra (M) Sdn Bhd has divide two e-mail to inquiries such as inquiries in the United States and European Union is pgadani@silterra.com and inquiries in Asia, Japan, Taiwan is mengkong_koh@silterra.com(www.silterra.com, 2013).

O4. Technology innovationSilTerra (M) Sdn Bhd has R&D and outsourcing to maintain their wafer technology. Although SilTerra (M) Sdn Bhd has a high wafer technology but they always continuously improve their products. Compare in the past, more competitors had entered into this industry.SilTerra (M) Sdn Bhd had continued to invest heavily in R&D to stay highly competitive global industry (www.silterra.com, 2013). R& D department of SilTerra (M) Sdn Bhd is trying to improve their wafer products. Moreover, they also had outsourced and the outsource company is X-Fab Kuching. This is because the products of wafer are becoming smaller than smaller. So that, they need to continuously improve their products to compete with competitors (Interview1, 2013).

O5. Future market volume demand Demand of the wafer in the market is increasing year by year. Nowadays is moving to technological era, so that wafer technology will become more important in the future. A lot of products using wafer to produce. For example, hand phone, camera, and television and so on. Foundries must structure capacities in their supply chain so that overtime it is possible to response to demand surge (Kader & Azizi, 2010).In the future, demand of the wafer will become very high. Besides that, Silterra (M) Sdn Bhd should increase their capacity because in the future is more focus on electronic products. Nowadays, the capacity of SilTerra (M) Sdn Bhd is lower than actual demand of market. So that, they had sub-contract for X- Fab Sarawak to solve the low capacity problems. This situation shows that the demand of the wafer in the market is higher than SilTerra (M) Sdn Bhd capacity(Interview 1, 2013). The demand of the wafer in the market is increasing so that this is an opportunity to let SilTerra (M) Sdn Bhd make profit. Since in the future the market has needed higher demand of the wafer.

Threat

T1. Rapid technology changeTechnologies that change with rapid day by day are affected many industries. For example, hand phones that on past few years ago be replaced by smartphones on nowadays. So, industries that produce hand phones and elements of hand phones had faced on problem to response on all rapid technology change. If industries do not have ability to response on all rapid technology change, they will have problem to stay on market. This is because they will not have ability to compete with competitors who able to response on rapid technology change.SilTerra (M) SdnBhd which is a high tech company need to able response on rapid technology change. Silterra (M) Sdn Bhd that produce wafer for chips needs to meet requirement market. It means that SilTerra (M) Sdn Bhd need to have ability for response on rapid market change which caused by technology change. Because of people that pursue improve constantly, technology also advance constantly to fulfill market requirement.SilTerra (M) Sdn Bhd has faced a lot of problem with rapid technology change. To response on technology changing, SilTerra (M) Sdn Bhd has to take in new machine for them to able produce more thinness wafer for chips used. SilTerra (M) Sdn Bhd has faced on capital problem to invest new machine that can produce more thinness wafer to compare with competitor for response technology changing. This is because of one new machine to produce wafer need more than RM 10 million on investment (Interview 1, 2013). Besides that, SilTerra (M) Sdn Bhd also faced problem to place on their new machine if theyinvest more new machines. This is because of Silterra (M) Sdn Bhd does not have any extra occur place for their new investment machine. They need to expand new factory for their changing layout (Interview 1, 2013).

T2. Unfavorable lawSilTerra (M) Sdn Bhd which is a government linked company is given salary based on amount that decided by government. Each of employees that work on SilTerra (M) Sdn Bhd also has wages which minimum RM 900 or 3high than RM 900 per month. The total amount of salary that decided by SilTerra (M) Sdn Bhd for give to each of employees is consider on employee qualification. Employee qualification that consider by SilTerra (M) Sdn Bhd when they decided wages to give is determined by their education. Employees that undergraduate on SPM, STPM and Diploma work on SilTerra (M) Sdn Bhd can get amount of salary that around RM 900 and RM 1400 per month. While employees that undergraduate on degree work on SilTerra (M) Sdn Bhd can get amount of salary that around RM 1400 and RM 2000 per month. The unfavorable law that has happened on SilTerra (M) Sdn Bhd is employees that with salary around RM 900 and RM 1400 per month have to work on workload that same with employees that with salary around RM 1400 and RM 2000 per month even their salary is low(Interview 1, 2013).Because of SilTerra (M) Sdn Bhd is a company that produce wafer which consists a lot of complex process and faced technology change, employees need to always improve their knowledge on process of produce wafer. So, unfair is happened which employees that undergraduate on SPM, STPM and Diploma has to catch up employees that undergraduate on degree by learning more compare to who undergraduate on degree. More of employees on SilTerra (M) Sdn Bhd that undergraduate on SPM, STPM and Diploma cannot be stay because they have to improve themselves with heavy workload (Interview 1, 2013).

T3. Exchange rateSilTerra (M) Sdn Bhd that produce wafer need main raw material from others country where are Singapore and Japan(Interview 1, 2013). Exchange rate from cash of Malaysia to cash of Singapore is low. This means that cash flow of Malaysia can only be changed with less value of Singapore currency. While cash of Singapore can be change to more value of Malaysia, it seen that cash rate of Malaysia is lower than cash rate of Singapore. So, exchange rate from cash of Singapore to cash of Malaysia is high.Because of exchange rate between cash of Malaysia and cash of Singapore, SilTerra (M) Sdn Bhd which takes main raw material from Singapore and Japan that exchange rate is high. So, SilTerra (M) Sdn Bhd which on Malaysia has to be buying the main raw material that more expensive compare to companies on Singapore. This is because of price main raw material had to included exchange rate from cash of Malaysia to cash of Singapore where SilTerra (M) Sdn Bhd on Malaysia take order from Singapore and Japan (Interview 1, 2013).

T4. Geographical DistributionSilTerra (M) Sdn Bhd that produce wafer for chip used had to supply their wafer to different country that need to use it for produced chip of application consumer, telephone communication and computer(Interview 1, 2013). So, different of country market requirement can be fully fulfill. Wafer that be produced by SilTerra (M) Sdn Bhd had to be supply to customer that located far from SilTerra (M) Sdn Bhd on Malaysia which are US, Taiwan, South Korea and China. This means that SilTerra (M) Sdn Bhd had a geographical distribution which is to different country. According to (Slack & Lewis, 2011), the geographical distribution of demand, together with customers required services level, will influence this decision, as will the economies of scale of the operation and the costs associated with supply. Because of SilTerra (M) Sdn Bhd that had a geographical distribution, SilTerra (M) Sdn Bhd had faced problem on communication and shipped product to their global customers. SilTerra (M) Sdn Bhd that consist of services contact manufacturing which is produced finished chip based on customers own design on wafer fabrication had problem to communicate with their customers at different country about their customers design through internet and telephone(Interview 1, 2013). This is because some of problems faced by both of them need to be discussing face to face. Besides that, SilTerra (M) Sdn Bhd also had problem on shipped their finished product to their different geographical country. Because of SilTerra (M) Sdn Bhd is far away from their global customers, products of SilTerra (M) Sdn Bhd that shipped to their customers had to take a lot of time. So, sometimes delay delivery time to customer has happened. This because of unexpected occur on path when delivery products.

T5. Sustainability of major raw materialSilTerra (M) Sdn Bhd that produce wafer needs to use silicon as major raw material. Silicon which is a natural element cannot always sustain to be major raw material for SilTerra (M) Sdn Bhd to produce wafer. This is because of silicon can be used end on one of time but when silicon used end cannot be expected by someone. So, unsustainability of major raw material had to consider even silicon still had many to provide for used. To prevent problem that happened while silicon used end on one of time, SilTerra (M) Sdn Bhd consider raw material that can used to replace silicon which is major raw material with have same characteristic. So, research and development department on SilTerra (M) Sdn Bhd has to always hardworking to make innovation on their wafer (Interview 1, 2013). With the innovation of research and development department, SilTerra (M) Sdn Bhd will be able to stable on market even someday silicon had been used end.

6.2 TOWS ANALYSIS

Internal Factors

External Factors Strengths(S)S1. High technologyS2. Multi skill workersS3. Good maintenanceS4. Just- In-TimeS5. Strategic locationWeaknesses(W)W1. High operating costW2. Lack of financial investmentW3. Lead time of raw materialW4. Lack of production lineW5. Do not have diversity product

Opportunities(O)O1. Good relationship with partnerO2. Expansion of new factoryO3. Technology advancedO4. Technology innovationO5. Future market volume demandSO Strategies1. Improve current products(S1+S2+O1+O4)2. Plan to increase capacity(S1+S2+O2+O5)3. Expanding distribution market(S1+S2+O5)WO Strategies1. Build alliance with suppliers (W1+W3+O2)2. Increase productivity (W4+O3+O4)3. Increase number of warehouse (W1+W3+O5)

Threat (T)T1. Rapid technology changeT2. Unfavorable lawT3. Exchange rateT4. Geographical DistributionT5. Sustainability of major raw materialST Strategies1. Buy new hi-tech machine (S1+T1)2. Find substitute of raw material(S4+T5)3. Provide training to worker due to rapid technology changing(S1+S2+T1)WT Strategies1. Joint venture with companies that same industry (W1+W2+T1+T2)2. Research and development on product (W5+T5)3. Improve efficiency integrated network system (W3+T5)

7.0 STRATEGIES COMMENTS AND RECOMMENDATIONS

SO Strategy

Positive commentBy producing high volume of wafers, SilTerra (M) Sdn Bhd constantly adapt with their high technology in terms of advancement in manufacturing technology such as CMOS logic, high-voltage technologies and mixed-signal/RF technologies. These technologies is intended to cost optimized with no additional masking layer or special process module needed.As a leading semiconductor wafer fabrication, SilTerra (M) Sdn Bhd was also be market demand driven and effort to win in the fast growing touch controller Integrated Circuit (IC) market which is now a standard feature in all the mobile devices such as smart phones, tablets, multimedia players, laptops, digital cameras, GPS as well as other computing, consumer, automotive, industrial and medical applications.

Negative commentIn contrast, SilTerra (M) Sdn Bhd faced their financial problems which not have sufficient financial resources to maintain their cash flow while produce the products. SilTerra has competed with cost due to overall accost structure design for chip fabrication was contributed highly cost. High technologies used by SilTerra (M) Sdn Bhd have high maintenance, when machine was breakdown, the cost for repairing that machine also high.

RecommendationSilTerra (M) Sdn Bhd should adapt with technology advancement all the time to competitive with their rivals. So that, SilTerra (M) Sdn Bhd required capital to invest on their new technologies advance to ensure operation flows running smoothly and increased capacity of production. As a recommendation, SilTerra (M) Sdn Bhd must doing joint venture with others company that can provide an investment fund on their semiconductor manufacturing. SilTerra (M) Sdn Bhd has their expertise in Electrical and Electronic field to convince their partnership.

WO Strategy

Positive CommentsSilTerra (M) Sdn Bhd which has a good relationship with partner can help SilTerra (M) Sdn Bhd build up trust from suppliers. Having good relationship with suppliers, SilTerra (M) Sdn Bhd can be guarantee that raw materials which need to produce wafer will not have shortage when production is running. Besides that, suppliers will also delivery raw materials for SilTerra (M) Sdn Bhd on time with trust that SilTerra (M) Sdn Bhd has ability for payback them. Moreover, suppliers on oversea will also guarantee that raw materials which supply for SilTerra (M) Sdn Bhd are in good quality and meet the required quality standard of SilTerra (M) Sdn Bhd.

Negative CommentsSilTerra (M) Sdn Bhd expand new factory for increasing productivity and the number of warehouse. So, SilTerra (M) Sdn Bhd can increase capacity which is under market demand for fulfilling customer requirements. To expand new factory, SilTerra (M) Sdn Bhd need to get investment on their company. This is because to expand new factory, many amount of money will be used. SilTerra (M) Sdn Bhd which more under investment of Khazanah Nasional Bhd has limited capital for them to expand factory. Besides that, SilTerra (M) Sdn Bhd has one warehouse on factory that to keep raw materials that delivery by supplier is no enough for SilTerra (M) Sdn Bhd. Warehouse of SilTerra (M) Sdn Bhd is enough to keep normal quantities of raw materials that used on production day by day which is needed to produce fix number of products. But SilTerra (M) Sdn Bhd will not have enough space to keep raw materials needed as they received extra order.

RecommendationsSilTerra (M) Sdn Bhd which had limited capital for expand factory can get investment from foreign countries. To get investment from foreign countries, SilTerra (M) Sdn Bhd has to make innovation for produce more thinness wafer compare to foreign countries. With difference that companies in same industry on foreign country which cannot produce, SilTerra (M) Sdn Bhd can strengthen their brand on foreign country. So, foreign countries will make investment on SilTerra (M) Sdn Bhd. SilTerra (M) Sdn Bhd which has one warehouse can get warehouse company for help them keep raw material where is needed to extra order. SilTerra (M) Sdn Bhd can make a contract with a warehouse company that to keep their raw materials as extra order is occur. Charge of Warehouse Company to keep raw materials is based on how many times that SilTerra (M) Sdn Bhd has keep on their warehouse. Hence, SilTerra (M) Sdn Bhd also can keep their raw materials without expand warehouse.

ST Strategy

Positive CommentsSilTerra (M) Sdn Bhd should find a substitute of raw material this is because silicon and copper can be used end on one of time. To prevent this problem, SilTerra (M) Sdn Bhd should consider other raw material to replace silicon and copper. If SilTerra (M) Sdn Bhd is getting lower price of raw material instead of silicon then they are able to save cost and increase the revenue.Besides that, SilTerra (M) Sdn Bhd has the ability to increase capacity. They always provide training for workers to increase their skills. In SilTerra (M) Sdn Bhd, all workers in production line workers have multi-skill. SilTerra (M) Sdn Bhd will give training to their worker in one to three years to know the process, how to use tools and equipment and how about expertise in the area discovery method such as identification of problem, how to solve and improve it and that training will develop workers skills.

Negative CommentsIn SilTerra (M) Sdn Bhd, buy a new hi-tech machine needs a lot of financial. To buy new machine to add a new production line is needs hundreds of millions. For example, once of machine to produce is around RM 10 million. Since that technology is changing rapidly so that hi-tech machine is much needed for every semi-conductor manufacturer included SilTerra (M) Sdn Bhd.

RecommendationOutsourcing is a good way to save cost compare with spending modal to buy new machines. SilTerra(M) Sdn Bhd should continuously outsourcing this is because boost capacity without spending hundreds of millions. SilTerra (M) Sdn Bhd had outsourced to another company which is X-Fab Kuching. To add a new manufacturing line needed hundreds of millions to set up machines. That is very costly, so that outsourcing and sub-contract to X-Fab Kuching is able to save costs.

WT Strategy

Positive CommentsSilTerra (M) Sdn Bhd which having joint venture with others company on same industry had capacity to produce wafer that fulfill market demand. With joint venture, SilTerra (M) Sdn Bhd will solved the problem which is demand on products is higher than capacities of SilTerra (M) Sdn Bhd. Besides that, SilTerra (M) Sdn Bhd which joint venture with others company can also reduce manufacturing cost and increase productivity. This is because of SilTerra(M) Sdn Bhd can reduce production line by replace with taken from company which joint venture. By this way, SilTerra (M) Sdn Bhd reduces time taken for finish products, expenses and capacities.Moreover, SilTerra (M) Sdn Bhd that also do research and development on their wafer. SilTerra (M) Sdn Bhd make innovation to product by replace raw materials which are natural elements such as silicon and copper with others element. This is because of natural elements cannot be sustainability to use forever. This caused SilTerra (M) Sdn Bhd can survival when one of a day elements be finished used. Besides that, SilTerra (M) Sdn Bhd also make improvement on their products by produced more thinness wafers. So, SilTerra (M) Sdn Bhd can be complete with their competitors. Furthermore, SilTerra (M) Sdn Bhd which had to communicate with supplier and customers on different geographical country can be implemented with efficiency. After implemented integrated network system, problems of delay supply for customers and delay receive from supplier will be reduced. With the integrated network system, mistake on quantities of products can be reduced. Moreover, customers and suppliers can change and check on quantities of order by their own as they are sure by SilTerra (M) Sdn Bhd as customers and suppliers.

Negative CommentsSilTerra (M) Sdn Bhd will faced problem on joint venture with others company. This is because of build trust to SilTerra (M) Sdn Bhd on others company that same industry to joint venture is a difficult work. Company which consider to joint venture with other company will see on that company capital ability, capacity ability and their reputation first before joint venture with that company. So, SilTerra (M) Sdn Bhd that still on the stage of capacity lower than demand is difficult to build trust by others company to them for joint venture. Besides that, SilTerra (M) Sdn Bhd which is government linked company had limited capital to invest on any research and development activities and application integrated network system. This is because almost all of capital is come from Khazanah Nasional Bhd. So, SilTerra (M) Sdn Bhd face on problem to implement integrated network system and research and development activities because no capital to invest. Moreover, SilTerra(M) Sdn Bhd need employees that expert on those activities to implement those activities. RecommendationsSilTerra (M) Sdn Bhd which capacity under demand has to expand new factory and invest new technology to increase their capacity for fulfill market demand. With the full capacity, SilTerra (M) Sdn Bhd can produced wafer that meet market demand with increased productivity. Through high productivity, SilTerra (M) Sdn Bhd can be build trust to others company for joint venture with them. To invest on research and development and application integrated network system, SilTerra (M) Sdn Bhd that less on capital also needs to find investor to invest on their company for support them. So, SilTerra (M) Sdn Bhd can increase their capacity that meets market with increase productivity. Besides that, SilTerra (M) Sdn Bhd also had to measure that employees that hired to implement has ability and knowledge on those activities.

8.0 CONCLUSION

For this project, we have made a study on SilTerra (M) Sdn Bhd. During the site visit, we have a better understanding about the company and their operation. From overall what we study, we can conclude that SilTerra (M) Sdn Bhd is capacity under demand. Since 2009, Silterra (M) Sdn Bhd receiving order volumes that exceed its monthly production capacity of wafer chips. SilTerra (M) Sdn Bhds monthly production capacity is around 30,000 wafer chips. Therefore, they need to outsource the surplus orders to their partners in the Asia-Pacific region. SilTerra (M) Sdn Bhd is a leading pure foundry in Malaysia which produces wafer chips. Although SilTerra (M) Sdn Bhd has competitor but they still have a strong position in the market. SilTerra (M) Sdn Bhd not only has local customers, they also have customer form other countries. Most of their products export to Taiwan, China, Korea and US. Besides that, SilTerra (M) Sdn Bhd use high technology to produce the wafer. For example, CMOS Logic technology, High Voltage technology and Analog technology is the technology use by SilTerra (M) Sdn Bhd. All of these technologies need specific machine to make the production of wafer run smoothly. Therefore, SilTerra (M) Sdn Bhd needs a large number of capitals to purchase the machine. The operating cost for SilTerra (M) Sdn Bhd is very high. SilTerra (M) Sdn Bhd is 98% owned by investment company, Khazanah Nasional Bhd. All of the capital is invested by Khazanah Nasional Bhd. After visit the SilTerra (M) Sdn Bhd, we gain more information and more understanding about the company. From the interview session, we have learnt the production process for the company, maintenance for their machine, and the way to ensure the production line run smoothly all the time. We have learned the operation in the production line and gain experience through the study for SilTerra (M) Sdn Bhd. As a conclusion, SilTerra (M) Sdn Bhd is a well-known wafer manufacturer in semiconductor sector in Malaysia. As we mention above, this company is 98% owned by Khazanah Nasional Bhd. All of the capital investment is depend on Khazanah Nasional Bhd. If this investment company does not invest on their company, they will face financial investment problem. To avoid this problem occurs, SilTerra (M) Sdn Bhd needs to ensure that the operation of their company is running smoothly and gain profit all the time.

REFERENCES

Bates, S. P.(2000). Silicon Wafer Processing. Retrieved November 1, 2013 from www.engr.sjsu.edu/sbates/images/.../

Chen, T.(2012). An Evolving Fuzzy-neural Rule with Diversification for Enhancing Job Dispatching Performance in Wafer Fabrication.International Journal of Grid and Distributed Computing.Vol.5.No 2. Retrieved November 1, 2013 from http://www.sersc.org/journals/IJGDC/vol5_no2/1.pdf

Mohd Azizi Chik & Mohd Hazmuni Saidin.(2010). Industrial Engineering Roles in Semiconductor Fabrication. The 11th Asia Pacific Industrial Engineering and Management Systems Conference The 14th Asia Pacific Regional Meeting of International Foundation for Production Research. Retrieved November 1, 2013 from http://www.apiems.net/archive/apiems2010/pdf/GEN/520.pdf

Chou, Y.C., Cheng, C.T., & Liang Y.Y. (2006). Evaluating alternative capacity strategies in semiconductormanufacturing under uncertain demand and price scenarios. Int.J.Production Economies. Retrieved November 1, 2013 from http://www.sciencedirect.com/science/article/pii/S0925527306001393

Chung, S. H., Lee, A.H.I., Huang, C.Y., & Chuang, C.C.(2008). Capacity pricing mechanism for wafer fabrication.Computers & Industrial Engineering.Retrieved November 1, 2013 from http://www.sciencedirect.com/science/article/pii/S0360835208000478

Capon, C.(2008).Understan