Press Statement by Tony Pua in Petaling Jaya on Monday, 3rd November 2008:

The Ministry of Finance and Khazanah Nasional must account for the losses incurred by Silterra Malaysia Sdn Bhd

The Ministry of Finance and Khazanah Nasional must explain both to the Parliament as well as to the Malaysian public in general on the calamitous performance of its wafer fabrication subsidiary, Silterra Malaysia Sdn Bhd.

As highlighted by the Member of Parliament for Labis, Chua Tee Yong, Silterra has incurred losses of RM1 billion in the financial year 2007, despite the fact that the Government has invested more than RM5 billion in the company since 1994.

A check with the records in the Companies Commission of Malaysia (SSM), the company also made losses of RM864 million and RM646 million in 2005 and 2006 respectively. The revenue generated by the company in these years were only RM461 million and RM551 million, lower than even the losses incurred!

What is most fearful is the fact that Silterra is seeking additional RM8.5 billion to fund its expansioin operations despite the fact that its shareholder capital have been reduced from RM5 billion to only RM798 million in 2006, possibly even lower in 2007.

Malaysia used to attract some of the biggest technological giants such as Intel, Motorola and Dell to develop and manufacture their latest technologies in the country. However, in the past decade, we have clearly fallen behind in terms of advancement in manufacturing technology. For example, Malaysia's current leading semi-conductor wafer-fabricator, SilTerra Malaysia Sdn Bhd offers major foundry compatible CMOS logic, high-voltage and mixed-signal/RF technologies down to 130 nanometer feature size. SilTerra’s wafer fab has a design capacity of 40,000 eight-inch wafers per month.

In fact, in our DAP's 2008 budget statement, we have stated that the semi-conductor technology has advanced significantly with state-of-the-art 90-nm technology on 300-mm wafers, and 65-nm production. The 45-nm process technology is now under aggressive development. Our neighbours, Singapore, for example, is attracting more of the ‘first-of-its-kind’ investments such as the chip used in the latest PlayStation3 and Xbox. A French semiconductor company, Soitec, is investing $700 million to set up in Singapore its first offshore facility to make the wafer for this chip in 2007. This advanced technology has wafers with alternating layers of silicon and insulator, unlike conventional wafers which use silicon throughout. Singapore became the only country in Asia that it trusts well enough to set up its first manufacturing campus outside of France.

Khazanah Nasional and the Finance Minister must explain to the parliament on the extraordinary losses incurred to date, the continued viability of Silterra and if viable, what are the critical measures being put in place to ensure that the company is able to turn around its operations. Do we have what it takes to compete in this particular sector, or would it be more beneficial for Malaysia to lay emphasis and invest in high-technology sectors which it actually possess competitive advantages.

* Tony Pua Kiam Wee, DAP National Publicity Secretary & MP for Petaling Jaya Utara