Frontken Corporation Berhad 200401012517 (651020-T) • ANNUAL REPORT 2023 13 BUSINESS OVERVIEW SEMICONDUCTOR As announced by the Semiconductor Industry Association (SIA), the global semiconductor industry sales totalled $526.8 billion in 2023, a decrease of 8.2% compared to the 2022 total of $574.1 billion, which was the industry’s highest ever annual total. As a result, demand for our semiconductor’s services also weakened slightly. We saw the overall industry to be relatively subdued during the first half of the year, and only gradually gained momentum towards the second half. Nevertheless, despite facing an ongoing volatile and weak business landscape, we managed to overcome these hurdles by tapping into our strong fundamentals and sturdy balance sheet. As indicated in my statement last year, we took the opportunity to work on new projects and fine tuning our operations during the slower period in anticipation of busier years to come. As the nodes get smaller and the process of making chips become exponentially harder, so too are our cleaning processes and technology to cater to these developments. The cleaning requirement for the chamber process parts has become more and more stringent, hence the need to achieve close to zero particle contamination has become more crucial than ever – even a single speck of dust could be damaging to our customers’ production. Therefore, our ultra-high purity advanced precision cleaning process is highly precise to ensure that the end result is of the highest quality to meet, in most instances exceed, our customers’ specifications. To ensure that we comply with our customers’ requirements, the cleaned parts are measured using the most advanced metrology systems and computerised data station. During the year, our R&D team continued to work closely alongside our customers to support them as they continue to advance in the leadingedge semiconductor technology. We are constantly exploring new ideas or improve those that already exist, especially in the area of ESG, where we utilise more environmentally friendly materials and automate some aspect of our processes. Other than growing organically, the Group continues to look for opportunities and possibilities such as potential mergers and acquisitions in the semiconductor space. We will keep our shareholders updated through our Company’s announcement should any of our endeavours materialise. As reported by World Semiconductor Trade Statistics (“WSTS”), the contraction in 2023 is to be followed by a robust recovery, with an estimated growth of 13.1 percent in 20241. Additionally, based on our conversations with our customers, we are cautiously optimistic that the performance of this segment will be more than satisfactory this year. Source: 1 WSTS Semiconductor Market Forecast Fall 2023 REVENUE SPLIT 2023 (%) 23% 77% Semiconductor Engineering An employee operating one of the equipment in our facility. An employee performing visual inspection using Black Light (Ultraviolet) before final packaging process to confirm that there are no fibres/substrate microcracks. CHAIRMAN’S MESSAGE (CONT’D)
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