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X-Fab Sarawak’s CEO Mike Young
X-Fab Sarawak’s CEO Mike Young

X-Fab is a German company that manufactures silicon wafers for mixed-signal integrated circuits. It has factories in Germany, the US and Malaysia. Inside Investor talked to X-Fab Sarawak’s CEO Mike Young about the advantages of producing in Sarawak and what makes X-Fab’s venture in Malaysia successful.

Q: As a German company, is the Malaysian branch of X-Fab a joint-venture or a standalone free zone company?

A: The branch is not a joint venture, it’s part of our group and one of four manufacturing facilities of X-Fab located in the Sama Jaya Free Zone in Kuching.

Q: Where do you get your qualified personnel from? What training opportunities do you offer?

A: We have training facilities on site. I have seen training centers of other companies, and in my opinion, ours is certainly one of the best. We are heavily involved with about ten universities in Sarawak, Sabah, and West Malaysia, we organise many road shows, where we promote ourselves as a Sarawak high-tech company. A couple of years ago we embarked on the JTS, or Journey to Semiconductor, programme, where we visit the students in the universities with the purpose to take on 12 to 15 graduates and put them through an intensive training programme supervised by our semiconductor manufacturing team. After a period of six months to one year we decide where we place these graduates in the company. It’s a very successful programme which receives a lot of publicity. We are also part of the SECA group, the Sarawak Electronic Components Association, and work closely together with their members in training programmes mainly in the Sama Jaya Industrial Zone. We do have several experienced engineers who do training on site, which is a cost effective way of training people. Of our 700 employees here, approximately 40 to 50%  have an engineering background, and we always need an inflow of such skills.

Q: What is the response of the students to the training programmes?

A: They see it as a unique opportunity for their career development. They are very enthusiastic.

Q: Do you send them overseas for further training?

A: Those in the JTS programme not, this training is mainly done inhouse. As a group, there is certainly an exchange within the training programmes at our different sites.

Q: What is the annual output of the Sarawak site?

A: Last year we produced about 120,000 eight-inch wafers. That’s 40 per cent of our capacity. This year, we are looking at about 150,000 to 180,000, as the industry outlook for 2012 looks much more promising. We have a good feeling that business is picking up.

Q: Do you export your entire production?

A: No, we have clients in Malaysia. In 2011, about 40 per cent of the production was sold to a Malaysian company, and the rest went to various customers abroad, mainly to the US and Europe.

Q: Why did X-Fab decide to set up a factory in Sarawak?

A: This has a long history. There was a company called First Silicon owned by the Malaysian government who built this facility in 2001 and produced wafers with a license from Japanese company. When X-Fab was formed, we saw that the technology they used was interesting for us, and we started talks with the Sarawak government in 2005. Eventually, the site was integrated into X-Fab and the technology was transferred to us. In 2008, we started production in Sarawak. From here, we can also address other markets than from our sites in Germany and the US, and produce bigger volumes. And most of our research and development resources are now here in Sarawak. Nearly 90 per cent of our technologies are developed here at the site. We have a great deal of expertise in the industry and have patented unique technologies. It gives us a lead ahead of our competitors.

Q: How do you see X-Fab Sarawak moving forward through 2012 and beyond, and what are the goals?

A: This site is crucial for the X-Fab group, here is where future technologies are developed. This is where our business must be expanded to meet the demand. What I want to achieve here is to establish the operational performance to support this growing business. We have laid down very solid foundations over the last years to build on, and I have high expectations that this site is going to be successful. In the long term, I also want to develop local talent to integrate them into the company rather than rely on expats.

Q: Do you find it difficult to retain foreign talent?

A: We usually have expats here for three to five years, and of course there is always a risk that they want to return to their home country for whatever reason, be it personal or for another job opportunity. We have created a work environment here to encourage them to stay, but we want to develop the local workforce to bring more stability to the company. We are also working together with the human resources department of the state government.

Q: Are there plans to expand X-Fab’s presence in Southeast Asia?

A: I am not aware of any plans. We could have 50 per cent more of capacity out of this facility. However as of now there is no need to expand with manufacturing in the region in the next few years. We can grow here at this site from 27,000 to 35,000 wafers a month. Given the market growth rates of ten per cent annually we have still potential here. We are currently more focused on expanding our selling activities to attract more Asian customers.

Q: Are you satisfied with the infrastructure facilities provided here?

A: If you look at all of the government programmes to expand the infrastructure and facilities here, every company would feel very attracted. All of this is very positive, and hopefully we will see the benefits. There is movement in the right direction. However, I would like to see more investors coming to this particular industrial park.

Q: How do you assess the high-tech industry in Sarawak in general?

A: This is a difficult question. There are a lot of opportunities for companies to come here. The key is to work closely with the universities. The high-tech industry will always need engineers. It is also important to work together with the government to improve the business environment to run successful operations.

Q: What is your stance on Corporate Social Responsibility as a group?

A: We are following the Code of Conduct of our industry group in Germany in all the countries where we are present. All of our sites are ISO-certified, we follow environmental codes and all other regulations. In Sarawak, we are open for all officials to check this. This was a government-owned facility before, and for this reason alone we cannot violate any regulations. By the way, the environmental regulations here are sometimes tougher than in Europe.

Q: Are you open for investors for your group?

A: We have a relatively fixed shareholder structure. In 2004, we had an IPO “trial” which was not successful. As of today, there is no intention to bring in new shareholders in. In terms of free cash flow, we don’t have the need for investors. It is also about independence, to be able to make our own decisions, which is important for us to achieve our long-term goals and to stick to our strategic plans. We are not looking for short-term gains, but for a sustainable business in the long term, and this is exactly what our group structure supports.

Q: What is your personal experience with working in Sarawak?

A:  I have the experience and enthusiasm to improve all aspects of the business. Personally, the first six months where a big challenge for me when I settled here in Sarawak and needed to understand the different cultures. But I think I have adapted very well here, the staff now know what my values are and what I want to achieve. I am certainly trying to proactively integrate into the community of Sarawak. Overall, it’s very enjoyable here.

Q: What is your personal message to our readers? What does X-Fab Sarawak encapsulate?

A: For me, X-Fab Sarawak shows that we value our employees and we are actively trying to put programmes together that are needed to bring the business success forward. We are having a long-term view on the business, and this includes our staff.

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Reading Time: 5 minutes

X-Fab Sarawak’s CEO Mike Young

X-Fab is a German company that manufactures silicon wafers for mixed-signal integrated circuits. It has factories in Germany, the US and Malaysia. Inside Investor talked to X-Fab Sarawak’s CEO Mike Young about the advantages of producing in Sarawak and what makes X-Fab’s venture in Malaysia successful.

Reading Time: 5 minutes

X-Fab Sarawak’s CEO Mike Young
X-Fab Sarawak’s CEO Mike Young

X-Fab is a German company that manufactures silicon wafers for mixed-signal integrated circuits. It has factories in Germany, the US and Malaysia. Inside Investor talked to X-Fab Sarawak’s CEO Mike Young about the advantages of producing in Sarawak and what makes X-Fab’s venture in Malaysia successful.

Q: As a German company, is the Malaysian branch of X-Fab a joint-venture or a standalone free zone company?

A: The branch is not a joint venture, it’s part of our group and one of four manufacturing facilities of X-Fab located in the Sama Jaya Free Zone in Kuching.

Q: Where do you get your qualified personnel from? What training opportunities do you offer?

A: We have training facilities on site. I have seen training centers of other companies, and in my opinion, ours is certainly one of the best. We are heavily involved with about ten universities in Sarawak, Sabah, and West Malaysia, we organise many road shows, where we promote ourselves as a Sarawak high-tech company. A couple of years ago we embarked on the JTS, or Journey to Semiconductor, programme, where we visit the students in the universities with the purpose to take on 12 to 15 graduates and put them through an intensive training programme supervised by our semiconductor manufacturing team. After a period of six months to one year we decide where we place these graduates in the company. It’s a very successful programme which receives a lot of publicity. We are also part of the SECA group, the Sarawak Electronic Components Association, and work closely together with their members in training programmes mainly in the Sama Jaya Industrial Zone. We do have several experienced engineers who do training on site, which is a cost effective way of training people. Of our 700 employees here, approximately 40 to 50%  have an engineering background, and we always need an inflow of such skills.

Q: What is the response of the students to the training programmes?

A: They see it as a unique opportunity for their career development. They are very enthusiastic.

Q: Do you send them overseas for further training?

A: Those in the JTS programme not, this training is mainly done inhouse. As a group, there is certainly an exchange within the training programmes at our different sites.

Q: What is the annual output of the Sarawak site?

A: Last year we produced about 120,000 eight-inch wafers. That’s 40 per cent of our capacity. This year, we are looking at about 150,000 to 180,000, as the industry outlook for 2012 looks much more promising. We have a good feeling that business is picking up.

Q: Do you export your entire production?

A: No, we have clients in Malaysia. In 2011, about 40 per cent of the production was sold to a Malaysian company, and the rest went to various customers abroad, mainly to the US and Europe.

Q: Why did X-Fab decide to set up a factory in Sarawak?

A: This has a long history. There was a company called First Silicon owned by the Malaysian government who built this facility in 2001 and produced wafers with a license from Japanese company. When X-Fab was formed, we saw that the technology they used was interesting for us, and we started talks with the Sarawak government in 2005. Eventually, the site was integrated into X-Fab and the technology was transferred to us. In 2008, we started production in Sarawak. From here, we can also address other markets than from our sites in Germany and the US, and produce bigger volumes. And most of our research and development resources are now here in Sarawak. Nearly 90 per cent of our technologies are developed here at the site. We have a great deal of expertise in the industry and have patented unique technologies. It gives us a lead ahead of our competitors.

Q: How do you see X-Fab Sarawak moving forward through 2012 and beyond, and what are the goals?

A: This site is crucial for the X-Fab group, here is where future technologies are developed. This is where our business must be expanded to meet the demand. What I want to achieve here is to establish the operational performance to support this growing business. We have laid down very solid foundations over the last years to build on, and I have high expectations that this site is going to be successful. In the long term, I also want to develop local talent to integrate them into the company rather than rely on expats.

Q: Do you find it difficult to retain foreign talent?

A: We usually have expats here for three to five years, and of course there is always a risk that they want to return to their home country for whatever reason, be it personal or for another job opportunity. We have created a work environment here to encourage them to stay, but we want to develop the local workforce to bring more stability to the company. We are also working together with the human resources department of the state government.

Q: Are there plans to expand X-Fab’s presence in Southeast Asia?

A: I am not aware of any plans. We could have 50 per cent more of capacity out of this facility. However as of now there is no need to expand with manufacturing in the region in the next few years. We can grow here at this site from 27,000 to 35,000 wafers a month. Given the market growth rates of ten per cent annually we have still potential here. We are currently more focused on expanding our selling activities to attract more Asian customers.

Q: Are you satisfied with the infrastructure facilities provided here?

A: If you look at all of the government programmes to expand the infrastructure and facilities here, every company would feel very attracted. All of this is very positive, and hopefully we will see the benefits. There is movement in the right direction. However, I would like to see more investors coming to this particular industrial park.

Q: How do you assess the high-tech industry in Sarawak in general?

A: This is a difficult question. There are a lot of opportunities for companies to come here. The key is to work closely with the universities. The high-tech industry will always need engineers. It is also important to work together with the government to improve the business environment to run successful operations.

Q: What is your stance on Corporate Social Responsibility as a group?

A: We are following the Code of Conduct of our industry group in Germany in all the countries where we are present. All of our sites are ISO-certified, we follow environmental codes and all other regulations. In Sarawak, we are open for all officials to check this. This was a government-owned facility before, and for this reason alone we cannot violate any regulations. By the way, the environmental regulations here are sometimes tougher than in Europe.

Q: Are you open for investors for your group?

A: We have a relatively fixed shareholder structure. In 2004, we had an IPO “trial” which was not successful. As of today, there is no intention to bring in new shareholders in. In terms of free cash flow, we don’t have the need for investors. It is also about independence, to be able to make our own decisions, which is important for us to achieve our long-term goals and to stick to our strategic plans. We are not looking for short-term gains, but for a sustainable business in the long term, and this is exactly what our group structure supports.

Q: What is your personal experience with working in Sarawak?

A:  I have the experience and enthusiasm to improve all aspects of the business. Personally, the first six months where a big challenge for me when I settled here in Sarawak and needed to understand the different cultures. But I think I have adapted very well here, the staff now know what my values are and what I want to achieve. I am certainly trying to proactively integrate into the community of Sarawak. Overall, it’s very enjoyable here.

Q: What is your personal message to our readers? What does X-Fab Sarawak encapsulate?

A: For me, X-Fab Sarawak shows that we value our employees and we are actively trying to put programmes together that are needed to bring the business success forward. We are having a long-term view on the business, and this includes our staff.

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