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BJMP 3053 OPERATIONS STRATEGY

COLLEGE OF BUSINESS
SCHOOL OF TECHNOLOGY MANAGEMENT AND
LOGISTICS

BJMP 3053 OPERATIONS STRATEGY
GROUP A
FISRT 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

Submission Date:


BJMP 3053 OPERATIONS STRATEGY

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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: 19
th
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 Date 19
th
November 2013
IMPORTANT:
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Please note that assignments will not be accepted without a completed cover sheet attached.







Assignment Cover Sheet

Signature of Group Members
No Name

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




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Group Members Profile


Lee Yun Hui
Matrix Number: s207186
Phone Number: 016- 4424023


Siti Nur Azilah binti Ahmad Nasir
Matrix Number: 205508
Phone Number: 013-4021772
Email: s205508@student.uum.edu.my
Phoon Jia Voon
Matrix Number: s205594
Phone Number: 017- 9133200
Email: s205594@student.uum.edu.my
Fauzi bin Ab Rashid
Matrix Number: s205624
Phone Number: 019-4514524
Email: s205624@student.uum.edu.my
Ong Sok Ying
Matrix Number: s205776
Phone Number: 012- 4694810
Email: s205776@student.uum.edu.my

Lee Yun Hui
Matrix Number: s207186
Phone Number: 016- 4424023
Email: s207186@student.uum.edu.my

Muhamad Amirul bin Mohd Zainudin
Matrix Number: s207187
Phone Number: 013-3078186
Email: s207187@student.uum.edu.my
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IV

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








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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.


BJMP 3053 OPERATIONS STRATEGY



CONTENTS
Assignment Cover Sheet ................................................................................................................................ I
Assignment Cover Sheet ............................................................................................................................... II
Group Members Profile ............................................................................................................................... III
Acknowledgement ....................................................................................................................................... IV
Executive Summary ...................................................................................................................................... V
1.0 INTRODUCTION ............................................................................................................................ 1
2.0 COMPANY BACKGROUND ......................................................................................................... 2
2.1 COMPANY PROFILE ....................................................................................................................... 3
2.2 ORGANIZATION STRUCTURE ...................................................................................................... 7
2.3 COMPANY LOCATION ................................................................................................................... 8
2.4 AWARD ........................................................................................................................................... 10
2.5 FINANCIAL STATUS ..................................................................................................................... 12
3.0 INDUSTRIAL PROFILE: PORTERS COMPETITIVE ADVANTAGES ................................... 12
3.1 THREAT OF NEW ENTRANTS ..................................................................................................... 13
3.2 THREAT OF SUBSTITUTE PRODUCTS ...................................................................................... 14
3.3 BARGAINING POWER OF BUYERS ........................................................................................... 14
3.4 BARGAINING POWER OF SUPPLIERS ....................................................................................... 15
3.5 COMPETITIVE RIVALRY EXISTING WITHIN AN INDUSTRY .............................................. 16
4.0 PESTAL ANALYSIS ........................................................................................................................... 18
4.1 POLITICS FACTOR ........................................................................................................................ 18
4.2 ECONOMIC FACTOR .................................................................................................................... 19
4.3 SOCIAL FACTOR ........................................................................................................................... 20
4.4 TECHNOLOGY FACTOR............................................................................................................... 21
4.5 ENVIRONMENT FACTOR............................................................................................................. 22
4.6 LEGAL FACTOR ............................................................................................................................. 23
5.0 ORGANIZATION STRATEGIES ....................................................................................................... 24
5.1 CORPORATE STRATEGY ............................................................................................................. 24
5.1.1 ECONOMIC SCALE AND BETTER COST STRUCTURE.................................................... 24
5.1.2 INVEST LARGER AMOUNT INTO R & D ............................................................................ 25
5.2 BUSINESS STRATEGY .................................................................................................................. 25
BJMP 3053 OPERATIONS STRATEGY



5.2.1 COST LEADERSHIP ................................................................................................................ 25
5.2.2 RAPID RESPONSE (NEW PRODUCT DEVELOPMENT) .................................................... 26
5.3 FUNCTIONAL STRATEGY ........................................................................................................... 28
5.3.1 FINANCE .................................................................................................................................. 28
5.3.2 HUMAN RESOURCE ............................................................................................................... 28
5.3.3 RESEARCH AND DEVELOPMENT (R&D) .......................................................................... 29
5.3.4 OPERATION ............................................................................................................................. 30
6.0 STRATEGY ANALYSIS ..................................................................................................................... 39
6.1 SWOT ANALYSIS .......................................................................................................................... 39
6.2 TOWS ANALYSIS .......................................................................................................................... 54
7.0 STRATEGIES COMMENTS AND RECOMMENDATIONS ............................................................ 55
8.0 CONCLUSION ..................................................................................................................................... 62
REFERENCES ........................................................................................................................................... 64
APPENDIX .....................................................................................................................................................



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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.
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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.


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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 II
Kulim Hi-Tech Park
09000 Kulim
Kedah Darul Aman,
Malaysia
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Email www.silterra.com
Fax +604-401 5005
Contact Number +604-401 5111
Milestones 1995 2000
1995 Company founded known as Wafer Technology Malaysia Sdn.
Bhd.
1997 Opened USA Office at San Jose, California
1999 Construction Commenced at KHTP
1999 Rename as Silterra Malaysia Sdn. Bhd.

2001 2005
2001 180nm production started
2001 ISO 9002 Certified
2002 Semiconductor International Top Fab Award
2002 ISO 14001 Certified
2003 Opened Taiwan Office at Hsin-Chu City
2003 ISO 9001 Certified Best High-Technology Manufacturing Facility
Award
2003 130nm Pilot Production Ready PRIME MINISTERS HIBISCUS
AWARD Notable Achievement
2004 Opened Sales office at Kuala Lumpur
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2006 2010
2007 Jointly developed 90nm and 65nm with IMEC
2007 160nm High Voltage Production Ready Achieve Sony Green
Partner Award
2008 130nm High Voltage Production Ready OHSAS 18001: 2007
Certified
2009 110nm Pilot Production Ready
2009 Frost & Sullivan Technology Implementation Award Power
MOSFET Production Ready HR Award - Silver Recognition for
HR Excellence Category
2010 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 Excellence Award 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
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Table 1:Overview of SilTerra (M) Sdn Bhd (www.silterra.com, 2013)










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.

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2.2 ORGANIZATION STRUCTURE












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





Chief Executive Officer
Senior Vice President
of Operating &
Engineering
Management
Senior Director
Deputy Director
Senior Manager
Manager

Vice President of
Technology
Development
Director
Senior Manager
Manager


Vice President of
Finance & Logistic
Senior Director
Senior Manager
Manager

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

Vice President of
Coperate Development
& External Affairs
Senior Director


Vice President of
Human Resource
Senior Manager
Manager
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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)
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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)
.
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2.4 AWARD


Diagram 2: IECQ Certificate of Conformity

Diagram 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
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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)


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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



Competitive Rivalry
within an Industry
Low
Less high technology
compare to competitiors

Bargaining Power of Buyers
High
Focus on customers
Threat of New
Entrances
Low
High Investments
Bargaining Power of Suppliers
High
Less suppliers on main raw
materials

Threat of Substitute
Products
No
Always keep up to
lastest technologies

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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
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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
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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)
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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
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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).
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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
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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).
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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.
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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
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(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
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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
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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

Economic scale
and a better cost
structure.
Invest a large
amount into R&D.
Corporate Strategy
Cost Leadership
Rapid Responde
( New Product
Development)
Business Strategy
Finance
Human Resource
R &D
Operation
Functional Strategy
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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
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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)

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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
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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
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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
BJMP 3053 OPERATIONS STRATEGY

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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.
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Process Flow to produce Wafer

Diffusion
Photolithography
Etching
Implant

CMP
Chemical-mechanical
planarization

Thin Film
Raw
Material
IC
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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.



BJMP 3053 OPERATIONS STRATEGY

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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.






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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
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&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)



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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.



BJMP 3053 OPERATIONS STRATEGY

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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.




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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.



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6.0 STRATEGY ANALYSIS

6.1 SWOT ANALYSIS

Strengths (S) Weaknesses (W)
S1. High technology
S2. Multi skill workers
S3. Good maintenance
S4. Just- In- Time
S5. Strategic location
W1. High operating cost
W2. Lack of financial investment
W3. Lead time of raw material
W4. Lack of production line
W5. Do not have diversity product
Opportunities (O) Threats (T)
O1. Good relationship with partner
O2. Expansion of new factory
O3. Technology advanced
O4. Technology innovation
O5. Future market volume demand
T1. Rapid technology change
T2. Unfavorable law
T3. Exchange rate
T4. Geographical Distribution
T5. Sustainability of major raw material





BJMP 3053 OPERATIONS STRATEGY

40

Strength
S1. High technology
SilTerra (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 workers
SilTerra (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
BJMP 3053 OPERATIONS STRATEGY

41

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 maintenance
SilTerra (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
BJMP 3053 OPERATIONS STRATEGY

42

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 location
Strategic 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.


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43

Weakness
W1 High operating cost
Silterra (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 investment
SilTerra (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
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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 material
SilTerra (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).


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W4 Lack of production line
SilTerra (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 diversification
SilTerra (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
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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 partner
SilTerra (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 factory
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
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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 advances
User 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).

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O4. Technology innovation
SilTerra (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).
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Threat
T1. Rapid technology change
Technologies 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
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.

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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 law
SilTerra (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
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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 rate
SilTerra (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 Distribution
SilTerra (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.
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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 material
SilTerra (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
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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.




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6.2 TOWS ANALYSIS




Internal Factors



External Factors
Strengths(S)
S1. High technology
S2. Multi skill workers
S3. Good maintenance
S4. Just- In-Time
S5. Strategic location
Weaknesses(W)
W1. High operating cost
W2. Lack of financial
investment
W3. Lead time of raw
material
W4. Lack of production
line
W5. Do not have diversity
product
Opportunities(O)
O1. Good relationship with
partner
O2. Expansion of new
factory
O3. Technology advanced
O4. Technology
innovation
O5. Future market volume
demand
SO Strategies
1. Improve current
products(S1+S2+O1+
O4)
2. Plan to increase
capacity(S1+S2+O2+
O5)
3. Expanding
distribution
market(S1+S2+O5)
WO Strategies
1. 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
change
T2. Unfavorable law
T3. Exchange rate
T4. Geographical
Distribution
T5. Sustainability of
major raw material
ST Strategies
1. 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 Strategies
1. 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)


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7.0 STRATEGIES COMMENTS AND RECOMMENDATIONS


SO Strategy

Positive comment
By 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 comment
In 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.



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WO Strategy

Positive Comments
SilTerra (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 Comments
SilTerra (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
Recommendation
SilTerra (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.
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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.

Recommendations
SilTerra (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.


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ST Strategy


Positive Comments
SilTerra (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 Comments
In 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.


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WT Strategy


Positive Comments
SilTerra (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
Recommendation
Outsourcing 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.

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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 Comments
SilTerra (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
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61

employees that expert on those activities to implement those activities.
Recommendations
SilTerra (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.











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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
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63

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.












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64

REFERENCES

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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
semiconductor
manufacturing under uncertain demand and price scenarios. Int.J.Production Economies.
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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).Understanding Strategic Management. England:Pearson Education.

Byrne, D.M., Kovak, B.K., &Michaels .(2013). Finance and Economics Discussion Series
Divisions of Research & Statistics and Monetary Affairs Federal Reserve
Board,Washington, D.C. Price and Quality Dispersion in an Offshoring Market:
Evidence from Semiconductor Production Services David.Retrieved November 1,2012
from http://www.federalreserve.gov/pubs/feds/2013/201306/201306pap.pdf

Kader Ibrahim & Mohd Azizi Chik.(2010).Variability Due to Tool Configurations That Impacts
Overall Capacity in Wafer Fabrication Facility. 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/498.pdf

Kader Ibrahim & Mohd Azizi Chik(2010).Managing Demand Variability to Achieve Optimum
Cost and Revenue in Wafer Foundry.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/499.pdf
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65

Karamjit Singh.(2013). Digital News Asia. Silterra adopts Asset Light and Capex Light strategy.
Retrieved September 30, 2013 from
http://www.digitalnewsasia.com/enterprise/silterra-adopts-asset-light-and-capex-light-
strategy

Khazanah Nasional.(2013). Retrieved 5 November 2013, from http://www.khazanah.com.my/

Kumar, R. (2008). Fabless Semiconductor Implementation. New York: McGraw-Hill.

Multimedia University. (n.d). Faculty of Engineering: Activities and Announcements. Retrieved
November 2, 2013 from http://foe.mmu.edu.my/v3/activity/nb/

Monch, L., Fowler, J.W., & Mason, S.J. (2013).Production Planning and Control for
Semiconductor Wafer Fabrication Facilities. New York: Springer.

Syahril Ridzuan Rahim, Ibrahim Ahmad, Mohd Azizi Chik, Ahmad Zafir Md. Rejab, & U.
Hashim. (2013). Development of Manufacturing Simulation Model for Semiconductor
Fabrication.World Academy of Science, Engineering and Technology 74. Retrieved 28
October, 2013 from http://www.waset.org/journals/waset/v74/v74-55.pdf

Reid, R.D., & Sanders, N. R. (2010).Operations Management: An Integrated Approach.
Hoboken: John Wiley.

Silterra. (2010). SilTerra (M) Sdn Bhd. Retrieved November 1, 2013 from
http://www.silterra.com/

Slack, N.& Lewis, M.(2011).Operations Strategy.England: Pearson Education.

Tu, Y. M., & Chen, C. L. (2010) Model to determine the capacity of wafer fabrications for batch-
serial processes with time constraints. International Journal of Production Research.Vol.
49, No. 10, 15 May 2011, 29072923. Retrieved November 2, 2013 from
http://www.tandfonline.com/doi/abs/10.1080/00207541003730854#.Uok69UFXjug

Wikipedia: Chemical-mechanical planarization. (2013). Retrieved November 1, 2013 from
http://en.wikipedia.org/wiki/Chemical-mechanical_planarization

Yeh, T.M. (2011).Constructing a production execption handling system for the semiconductor
manufacturing process.Kybernetes.Vol.40.No.9/10,2011 pp.1530-1542. Retrieved
November 1, 2013 from
http://www.emeraldinsight.com/products/journals/journals.htm?id=k

Interview 1.(2013). Interview with Mohd Azizi bin Chik.Senior Member of Technical Staff
Industrial Engineering during visit Silterra (M) Sdn Bhd.

Interview 2.(2013). Interview with Mr . Ong Boon Teong.Manager of Manufacturing- training
and enhancement during visit Silterra (M) Sdn Bhd.
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Interview 3.(2013). Interview with Mr Mohd Hazmuni bin Saidin.Senior Manager Industrial
Engineering during visit Silterra (M) sdn Bhd.

Interview 4.(2013). Interview with Dr Kamarulzaman.CEO, Silterra (M) sdn Bhd.



















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APPENDIX


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Site Visit Report
Date: 10 October 2013
Time: 2.00pm -5.00pm
Venue: SilTerra Malaysia Sdn Bhd
Group Members: 1. Siti Nur Azilah binti Ahmad Nasir
2. Phoon Jia Voon
3. Fauzi bin Ab Rashid
4. Ong Sok Ying
5. Lee Yun Hui
6. Muhamad Amirul bin Mohd Zainudin

Interviewee: 1. Mohd Azizi bin Chik (Senior Member of Technical Staff Industrial Engineering)
2. Ong Boon Teong (Manager of Manufacturing- training and enhancement)
3. Ismail Ghzanfar (Officer of Corporate Development and External Affairs
Department)
4. Mohd Hazmuni bin Saidin (Senior Manager Industrial Engineering)


On 10 October 2013, we had visit SilTerra (M) Sdn Bhd at Kulim Hi-Tech Park, Kedah for site
visit. We departed from UUM at 11.30am and reach SilTerra (M) Sdn Bhd around 1.00pm. We
greeted by Mr Hazmuni and waiting at the lobby for interview session.
Our interview session start at 2.00pm and conducted by Mr Azizi. During the interview
session, Mr Azizi explains about the company background, details about company operation and
product produce by the company. Besides that, he also showed a video about the process flow of
wafers. After watch the video, we continue with ours session interview.
Around 4.00pm, we went to visit the wafer fabrication. For this session, we led by
Mr.Ong. Before we enter the fabrication, we required wear bunny suit. Wafer fabrication is an
environment with a controlled level of contamination. The purpose of wear the suit is to prevent
ours skin and hair being shed into a clean room environment. In the fabrication, Mr Ong brings
us walk around the fabrication and starts to explain the function of some of the machine. Due to
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the process flow of making wafers is too many and quite complicated (around 400- 900 steps),
we cannot see how the wafer produced from the first stage until final stage.
After visiting the fabrication, we are invited to VIP dining room to have a high tea with
the interviewees. Before leaving the company, we gave the souvenirs to Mr Ghzanfar as
appreciate for arrange ours request to visit SilTerra (M) Sdn Bhd. We departed from Kulim
around 6.00pm and reached UUM around 8.30pm.


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Company Visit Questions
General Question
1. Background- History
Who is the organizer of this company?
How many factories do you have?
Where all the factories located?
Where factory located is the first factory?
- Objectives
- Capacity of Labor Total number of staff?
- Product
How many types of product does your company produce?
Which product is latest product?
When is the product start to introduce?

2. Process Flow of company
3. Annual Report within 3 years -2010, 2011, 2012

SWOT Questions
Strength
1. Majority of your workers are from which country?
2. Is your factory located near to your workers?
3. Do you have adequate workers?
4. How many skilled workers do you have?
5. Do you require any skills from your workers?
7. How often do you train your workers?
What training do you apply for your employees? For example?
After training, is your workers have any improvement?
How do you measure your workers performance?
8. Is all your labour fully utilized?
9. Do you face machine breakdown problem before?
How do you solve it?
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How long the periods do your company to solve the problem?
What are the precautions taken to avoid it?
10. Do you have any specify machine or system that only applied by your company?
What is the machine?
How it works?
11. How often do you maintenance your machines?
When was the last time you check your machine?
How much can you produce in a day after you have maintenance your machine?
12. Do your company have research and development?
13. What benefits do you get from this factory location?
Is it near to your resources (supplier)?
Is it near to your customer?
14. Do you outsource any of your product or parts?
Where do you outsource?
What are the reasons that make you outsource your parts/product?

Weakness
1. Do you have any plan of expanding your factory or adding another factory?
2. Do you have adequate capital resources to support your company?
3. Does your warehouse have sufficient space to store your raw material?
4. How many months raw materials can be stored in your warehouse?
5. How frequent do your company reorder raw materials?
6. Do you face any shortage of raw material before?
How you solve the problem?
7. How do you manage your inventory?
What system do you applied?
8. What is the lead time to transfer the raw material to production line?
9. What is the lead time for you to receive the raw materials from your supplier?
10. Do your company face any supplier do not delivery on time?
11. How many suppliers do you have? How do you evaluate them? Is it based on their
geographical?
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12. Is your transportation cost high?
Whats the solution to solve the problem?
13. What is the maximum production that you can produce (monthly/yearly)?
14. Does your company forecast future demand?
What method do you use to forecast?
Is it an effective method?
Is it cheap to be used?
Which type of forecast do your company made?
15. If there are changes in your demand, are you able to cope to the demand changes?
16. Do you have adequate capacity to meet your monthly/yearly demand? In terms of
workers, technology, machinery?
17. Do you face any problem unable to meet your demand?
What is the factor that caused it
What action is taken?
Is your action success?
If failed? What is the effect of the problem to your company?
Opportunities
1. Is your company advanced in technology?
2. How your company enter the global market?
What makes you able to access the global market easily?
3. Do you see any opportunities in expanding your company to another country?
Where?
Why?
Is there any planning?
4. What is your demand trend? (increasing/ decreasing/ consistent)
5. Is there any new government policy regarding to your industry?
6. Where do you get information regarding to your industry? Supplier?
7. Is the number of turnover in your company low or high?
8. Is your products has a high demand in the market?
9. What infrastructures that you have that help you to develop your company?
What is the infrastructure?
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What are the benefits that you gain?

Threats
1. What is the technology changing rate? Fast or slow?
2. Are you facing challenges from the technology changes?
3. How you overcome the challenges from technology changes?
4. Is there any unfavourable law? (e.g. Workers minimum salary/wages)
What is it?
What is the impact to your company?
5. Is there any tax charge on your company?
How it affect your company?
6. Is the political issue affects your company?
How does it affect you?
What is the plan to overcome the problem?
7. How the Malaysia current economy affect to your company?
E.g. Workers cut down, workers turnover high etc.
8. What challenges are you facing from your competitors?
Who is your competitor?
What is the effect?
What action is taken to minimize the effect or to overcome it?
9. Do you face any obstacles in developing your company?
10. Do your employees carry out a strike before?
When was the last time it happened?
What is the issue?
What is the impact to your company?
How do you handle the problem?
11. Is your intellectual property properly secured (trademarks, copyrights, firewalls, data
security plans, etc)?
12. Do you rely on third parties for critical steps in your development process?
What is the risk for involving the third party?
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What is the benefit that you gain from them?
13. What is the major challenge that you will face when you are entering to global market?





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Photos for visit SilTerra (M) Sdn Bhd


Mr Ong Boon Teong

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Encik Hazmuni


Encik Azizi




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