SEGMENTAL REVIEW Technology Division Our technology division encountered challenging market dynamics during FY2023, marked by a downturn in the semiconductor market that hindered our ability to meet manufacturing capacity requirements to ensure production profitability. However, it is vital to recognise that the semiconductor demand has historically exhibited cyclical patterns, and such downturns are inherent in the industry. We maintain confidence in the long-term viability of this sector and are steadfastly focused on positioning ourselves optimally for the next upswing while diversifying our business to ensure portfolio resilience against future market uncertainties. Having anticipated such market fluctuations, we had already begun proactively expanding SilTerra’s horizons beyond its core business in 2022, channelling over USD150 million into the research, development and commercialisation of emerging technologies, notably microelectromechanical systems (“MEMS”) and Silicon Photonics. With MEMS and Silicon Photonics possessing numerous applications across the Artificial Intelligence (“AI”), electric vehicles (“EV”) and medical sectors, amongst others, the demand for these emerging technologies is steadily increasing and anticipated to maintain an upward trend. This therefore represents an opportune time for SilTerra to penetrate the market and validates our strategic investment into these sectors to future proof our business. With our newly developed products currently undergoing product testing and qualifications with new global customers, and a 20 per cent expansion of our manufacturing capacity completed in 2023, we are well-positioned to capitalise on future demand and benefit from the higher average selling prices and profit margins these products will offer. Several new customers from the AI and EV sectors have already been onboarded, providing us with a springboard to launch our new emerging technologies into the market. Energy Division Even as the world collectively transitions away from fossil fuels, there remains great potential for growth in the oil and gas sector, with the recent COP28 summit confirming the vital role that oil will continue to play in ensuring energy security in the coming decades. However, the ongoing energy transition has led to regulatory developments such as the Energy Profits Levy, which has heavily impacted our profitability and decreased the feasibility of rapid expansion in the UK. In response to this evolving landscape, we have adeptly capitalised on our strengths as a lowcost operator with extensive global experience and a robust track record to shift Ping Petroleum’s focus towards expanding operations closer to home. Acting with speed and agility, we have successfully bid for new domestic projects from PETRONAS and acquired interests in three fields across Malaysia over the past year. This includes acquiring a 60 per cent working interest in the Meranti Cluster, located off the east coast of Peninsular Malaysia, as well as a 70 per cent working interest in the A Cluster located at Sarawak, both of which were secured in January 2023. However, with these two oilfields still in the early development stages, we also acquired a 100 per cent working interest in the Abu Cluster in October 2023. This late life asset bears the potential for near-term revenue generation and represents our immediate focus as we target first oil production in early 2025. With MEMS and Silicon Photonics possessing numerous applications across the Artificial Intelligence (“AI”), electric vehicles (“EV”) and medical sectors, amongst others, the demand for these emerging technologies is steadily increasing and anticipated to maintain an upward trend Integrated Report 2023 13
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