Frontken Berhad Annual Report 2020

Annual Report 2020 10 FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) Taiwan In FY2020, the Group’s subsidiary in Taiwan, Ares Green Technology Corporation (“AGTC”) recorded the best ever operating profit of RM83.1 million, an increase of 46% from a year ago. Revenue was also up by 27% to RM240.5 million. This achievement was largely attributable to the increased business from our key customers as a result of the ramp up of the advanced technology nodes. Semiconductor designers and manufacturers are on a quest to make chips denser, faster and more energy efficient. Our unwavering focus on technology and R&D in ultra-purity cleaning processes and surface treatment has made us a highly trusted partner to our customers’ technology roadmap. As the nodes get smaller, the levels of particles and deposition contamination have become increasingly critical. Our R&D team in Taiwan worked on improving the quality of data collection using high-end metrology equipment, innovating different advanced treatment method and at the same time optimise production and process costs. At the moment, we are also exploring opportunities in new ultra-cleaning processes on our customers’ parts that will help to reduce the process time while achieving the same, if not better, end results. During the year, the Group also added a few new production lines to better cope with the existing demand and for an improved process flow to achieve better efficiency. With the combination of the new lines and right product mix, tools/ equipment, we saw improved efficiency in cost and productivity without comprising the quality of our products/services. Consequently, we were also able to improve our profit margins and pass some of the savings to our customers. The wastewater treatment upgrade in Taiwan was also completed during the year and we are expecting an overall improvement in effluent quality, in-line with the Group’s target on minimising environmental impact from our operations. In FY2020, we continued to increase our shareholding in AGTC from 90.85% a year ago to 91.25%. Malaysia The Group’s semiconductor business in Malaysia was slightly disrupted in the first half of FY2020 amidst the lockdown in the country that resulted in a slowdown to some our customers’ business. However, business picked up in the second half of the year as the favourable market conditions in the semiconductor sector gained its momentum and is expected to prevail through 2021. Although Frontken Malaysia in recent years had maintained its dominance in the market and is still the largest parts treatment and cleaning service provider in the country, we are still working very hard to develop new customers. One of the achievements in FY2020 was passing the qualification process by a multinational HDD customer that we were working very closely with for some time. Singapore The Group’s semiconductor business in Singapore continued to perform admirably with operating capacity close to normal in spite of the circuit breakers imposed by the government. However, the performance could have been better if not for the labour shortage that arises following a period of travel restrictions on our employees from Malaysia. Our immediate priorities for the year was to ensure a sustainable output and productivity level. This includes managing our labour force, talent retention, getting new parts qualification by our existing customers and improving both quality and quantity of our production. In FY2020, we completed and achieved the technical targets for the project on advanced precision nano-cleaning and refurbishment for etch critical chamber parts used in the next generation wafer fabrication. We developed, created, validated and qualified our best known method, process of records, and work instructions for the same. We also led in the most advanced precision cleaning and coating for the next generation memory wafer process in Singapore. Our R&D team researched and developed more environmentally friendly methods for our advanced cleaning and coating processes. We improved our production process flow and productivity by 12% and on average reduced the manpower by 1.2 hours per kit. Most importantly, we replaced some of the steps and processes so as to be more conducive and safe to the physical and mental health of our employees and the environment. Chairman’s Message (cont’d)