Silterra draws multiple bids


In pursuit: Silterra Malaysia’s plant in Kulim Hi-Tech Park in Kedah. Sources say the new parties jumping into the bid for Silterra are semiconductor giants Foxconn and X-FAB.

AN intense bidding war for local semiconductor wafer foundry Silterra Malaysia Sdn Bhd is ongoing, which has also resulted in confusion over whether foreign parties are allowed to own a majority stake in the asset, sources say.

Sources say that Khazanah Nasional Bhd, which wholly owns Silterra, had begun a divestment process for Silterra in February this year.

It had invited a number of local parties to put in bids that needed to include how they would turn around the loss-making business and the amount of cash they intend to invest into the business and any international partners willing to do some level of technology transfer, among other factors.

Sources say that bidders were also briefed that due to local regulatory requirements, Silterra’s manufacturing plant would need to be majority owned by local parties.

Hence any foreign participation would have to only take on minority stakes in Silterra, the sources say.

However, recently, two international players have entered the fray with bids that are high. Due to their late entry into the bidding process, Khazanah is said to have postponed the timeline for the sale of Silterra.

Sources say the new parties jumping into the bid for Silterra are semiconductor giants Foxconn and X-FAB.

Foxconn is a Taiwanese multinational electronics contract manufacturer best known for its work for Apple Inc, while X-FAB is a German-based foundry group manufacturing silicon wafers, which also has operations in Malaysia.

It is understood that Foxconn’s bid ascribed an enterprise value for Silterra of around US$125mil, the highest of the bids.

However, sources say that Foxconn’s bid entails it gaining majority control, which is why it is willing to pay such a premium over the local bidders.

The entry of both these foreign companies have come at the tail end of Silterra’s divestment process and seems to have differing guidelines regarding foreign ownership, which is why the local bidders are up in arms.

Locally, two listed companies have respectively partnered with China-based private equity groups which have a firm interest in investing in the wafer fabrication space, due in large to the US-China trade war which has had a huge impact on the global semiconductor supply chain. However, sources say their bids are lower, largely because their foreign partners were only minority participants in the bids.

According to sources, these two local players are Dagang Nexchange Bhd (DNeX) and Green Packet Bhd.

At the time of writing, Khazanah had yet to respond to queries from StarBizWeek.

A Finance Ministry official says that a process is running to find the right partner for the business. Silterra was the brainchild of former prime minister Tun Dr Mahathir Mohamad who sought to nudge Malaysia higher up the value chain of the semiconductor industry. But the company has struggled to become a profitable entity amidst intense competition and the complex nature of chip fabrication.

It has been reported that Khazanah has twice in the past sought to divest Silterra with little success. This was in 2008 and 2010. The move by Khazanah to divest Silterra comes as no surprise as the sovereign wealth fund has been selling off non-core assets in recent times.

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Siltera , semiconductor , wafer , Khazanah Nasional , Foxconn ,

   

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