Sunday, July 25, 2010

The Electronics Industry: Can We Resuscitate the Golden Goose?

Dr Fong Chan Onn

Malaysia’s Link with Electronics


The uproar over the dramatic decline in Malaysian FDI for 2009 over the last few days has prompted me to pen this article to explain a major reason behind the fall in our 2009 FDI, and what we can do to reposition ourselves for rapid recovery.

Our love affair with electronics began in the early 1970s when Craig Barrett of Intel, who was scouting for a suitable location for his factory outside of US, landed in Penang. Dr (Tun) Lim Chong Eu, then Chief Minister of Penang, heard that he was coming and gave immediate instructions that the roads from Georgetown to Bayan Lepas be tarred by the following day, ahead of Barrett’s site visit.

Sure enough, the very next day the roads were all ready, as workers toiled all night for the site inspection. So impressed was the CEO of Intel to the responsiveness of the government, that he agreed without hesitation that Penang would be his first factory outside of US.

The rest, as they say, is history.

Very quickly, American electronics companies like Texas Instruments, Motorola, Seagate, Western Digital followed suit. The Germans like Osram and Siemens joined the fray, followed later by other Japanese giants like Panasonic and Matsushita.

The presence of these MNCs boosted jobs in Penang as well as the rest of the country, which was having very high unemployment rates of about 30% at that time. Malaysia was just recovering from the racial riots 1969; thus job creation was the top priority.

Regionally, Asia was also poor and unstable.

Thailand was encountering military coups. China was still recovering from the abuses of the Cultural Revolution. Vietnam was at war. Burma, Laos, and Cambodia were all nations plagued with internal conflicts. Both Indonesia and Philippines were still under dictatorships. The region was in a delicate situation.

Intel Penang remained its sole factory outside of US for nearly 30 years until the emergence of China and Eastern Europe. Malaysian electronics companies, like Unisem, LKT and MPI, supporting the MNCs also flourished.


Hundreds of other SMEs supplying uniforms, catering, packaging, logistics, transport, as well as numerous other professional engineering, financial and computing services have also benefitted from the billions spent in the economy.

Very soon, Malaysia became the number one semiconductor outsourcing and manufacturing hub in the world.

So successful was Malaysia that even Singapore initially trailed the Penang model.

Being a foot-loose industry, the electronics sector could be built up anywhere in the world with the necessary infrastructure.

But Malaysia, beginning with its initial lucky start in 1972, continued to remain the first choice of the electronics players (until late 1990s), because we remained hungry, tuned in to the needs of the industry, adjusted to the changing electronics waves’ needs and provided the needed incentives to attract them.



As shown in Diagram 1, in the 1970s with the lucky break of Intel coming to Penang, we became known and soon became the ideal base for electronics labour-intensive assembly activities because of our then comparatively good infrastructure.

In the 1980s, we attracted the Japanese and Korean MNCs (Matsushita at one time had more than ten plants) in a big way, and Malaysia became the major exporter of E&E equipment (e.g. air-conditioners, fans, and TVs). This was achieved through our very successful export-orientation drive, under which we provided generous tax incentives to the FDIs (which were soon replicated by other nations).

The 1990s was a period of electronics boom. Personal Computers (PC) and first generation hand-phones became the fads, generating a huge demand for PC products such as disc drives, hard discs, computer ROMs and RAMs and hand-phone circuit boards.

Because we remained hungry and kept our ears to the ground we anticipated the beginning of this new wave. In 1988, (Tun) Dr Mahathir, then Prime Minister, announced the removal of all Bumiputera and local equity conditions for FDI coming in (for export operations) in New York. Companies such as Dell, Motorola, and the Taiwanese Acer invested in us in a big way, and soon we became a major exporter of PC components and Motorola hand-phones.



By 2000 as shown in Diagram 2, the country’s total export value expanded to RM337 billion with Electrical and Electronics (E&E) products contributing up to RM 230 billion, or 68.2% of total exports!

Missing the Electronics Linkage since 2000

In late 1990s, we anticipated and even prepared for the next new wave of boom through the creation of the Multi-Media Super Corridor (MSC) in 1996 and later Cyberjaya.

However the 1997 financial crisis required Malaysia to impose capital controls. This protected the survival of the existing electronics firms in the country through the fixed low exchange rate that kept our E&E products competitive, however this discouraged the inflow of FDIs in the new wave electronics activities.

Further the MSC also imposed many locational requirements on potential investors, which further hindered their coming in.

Inadvertently, we let success got into us, became overconfident, and did not follow up on the many suggestions and requests of the world’s electronics leaders such as Bill Gates and Stan Shih who attended our International Advisor’s Conferences at Cyberjaya hosted by the government.

In the meantime, countries such as China, Singapore, Taiwan and Korea (which recovered faster than Malaysia from the crisis) replicated our plans and became the main beneficiaries of the internet and smart-phone booms over the first decade of the new century.

As shown in Diagram 1, over the period 2000-2010, Malaysia was essentially de-linked from the new wave of electronics boom as the E&E companies in Malaysia did not established significant linkages to new technological products such as iPod, iPhone and Blackberry. By 2009, although the country’s total export increased to RM 553 billion, that of E&E products remained essentially stagnant at RM 246 billion, forming only 44.5% of total exports (see Diagram 2).



In particular, as shown in Diagram 3, the years 2008 and 2009 were actually the end of the last electronics cycle down-turn, with an over 30% reduction in the spending of all major semiconductor sub-sectors in 2008 and an over 40% decline in 2009.

This huge reductions in semiconductor spending over 2008-09 severely affected FDI inflow into Malaysia in 2009 (since our industrial base is still electronics-dominated), and is a major reason accounting for the low inflow of only US$ 1.381 billion in FDI into the country for the year.

China, in particular, since 2000 introduced new incentives in the form of grants and cheap land and quickly emerged as the base for the design and manufacture of the Apple iPods, iPhones, and now the iPads; and is also rapidly emerging as the major centre of photovoltaics manufacture. Taiwan, of course, became a major exporter of laptops and accessories, while Korea emerged to be the world’s top player in LCDs and flat-screen TVs. Singapore also participated actively in and benefitted from the new bio-medical technology wave with many new FDIs in the area of electronics bio-medical technology.

What can we do to Recover?


It has been widely forecasted (see Diagram 3) that 2010 will be the beginning of a new up-turn in the electronics cycle. Gartner Inc. of Stamford, Connecticut has estimated that spending in all the major semiconductor sub-sectors will increase by over 70% in 2010 alone! This uptrend will continue beyond 2012, with annual increases in spending of about 20%.

Interview with many of the electronics firms operating in Malaysia indicate that they are also experiencing significant improvements in theirs’ export orders for 2010.

Many of them are planning to open new operating lines, and are urgently seeking approvals from the relevant agencies to bring in thousands of required skilled workers and hundreds of skilled engineers. Their applications have so far been met with slow response from the immigration department.

The government should intervene urgently and allowed these firms to bring in the necessary workers (skilled and unskilled) for a limited time frame so that we can immediately ride on the new up-turn in the electronics cycle. This will help to improve our investment environment and generate new FDIs.

Besides capturing on the up-turn in the electronics cycle, we should also quickly steer our policies and incentives towards attracting more electronics investment in the new growth areas of solar energy, tablet computers, smart-phones, iPads, as well as solid state lighting (LEDs) and medical bio-technologies.

MIDA should engage the major players in this area (especially the Cupertino-based Apple) and convince them that what China can offer we can do better.

In a nutshell, we have to recapture the spirits of our pioneering hungry days of the early 1970s. We have to go the extra mile to offer investors terms better than our competitors so that they can set up bases here.

SunPower of San Jose is already building a US$ 700 million solar panel manufacturing plant in Malacca in my constituency of Alor Gajah, and B. Braun Melsungen from Germany is planning a US$ 600 million medical manufacturing plant in Penang.



But these are only small catches in the wide spectrum of new wave electronics investment.

As shown in Diagram 4, the iPhone global market will expand from 33.8 million units in 2010 to 80 million units by 2012, a more than two-fold increase over the next two years. Similarly the global tablet computer market will grow from 12.9 million units in 2010 to 50.4 million units by 2012, an almost four-fold increase over the next two years!

We have to offer incentives (in the form of grants and venture capital, as well as allowing the unlimited inflow of skilled workers, engineers, and scientists) so that we can integrate Malaysia into the supply-chain of Apple, Google, Microsoft, as well as the major solar energy (SunPower and Pasadena’s eSolar) and bio-technology (such as San Diego’s Scripps Research Institute and the Salk Institute) manufacturers; just like the days of the early 1990s when Motorola was world’s dominant hand-phone supplier and their phones were designed and manufactured in Malaysia.

Going forward, MIDA will have to remain alert; alert to the next waves of emerging industries in electronics, bio and nano-technology.

While we try to diversify away from electronics to other areas such as oil and gas, petro-chemicals and new materials, we must not forget that our industrial root is in electronics.

We have spent the last 40 years building up a large electronics base, with many local semiconductor manufacturers, as well as numerous SMEs which have achieved world recognition.

The sector has become our golden goose. The goose is now breathing slowing. We have to resuscitate it so that Malaysia can continue to progress rapidly.

We should send special teams of Malaysian scientists and engineers out to the South California Oakland-San Diego axis along Route 101, as well as to the Boston and Seattle areas to act as our early informants on the new emerging electronics trends. Nano, electronics, solar and bio-tech products that will come out in the market 3 years from now are already being tested and discussed in the R&D centers in these areas. By being familiar with them we can then design incentives to attract these relevant manufacturers to Malaysia.

By keeping our ears to the ground, by being open and liberal to the needs of the new-wave entrepreneurs, and by not forgetting our electronics roots (but instead foster and encourage the growth of these roots), we would be able to reconnect ourselves to the new trends in the electronics industry and ride the new up-turn of the coming wave.

Then we could see a new revival in our FDI figures, hopefully in the not too distant future.


//End.

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电子业:我们可以使下蛋的金鹅起死回生吗?

冯镇安博士

大马与电子业的链接

过去几天来,有人在怒吼,指大马于2009年的外来直接投资显著下滑。这促使我提起笔写下了这篇文章,以解释我国在2009年的外来直接投资下降的主要原因,以及我们应该如何重新定位,以迅速恢复原有的情况。

我国和电子业发生链接,是始于上个世纪的70年代初期,当时英特尔公司的贝瑞尔要在美国以外的地区为这家公司物色理想的地点,以便设厂而抵达槟城。当时的首席部长敦林苍佑医生听到他要来实地考察的消息,立刻训令有关当局,隔天就在乔治市到峇六拜之间的所有公路铺上泊油。

果然,在工人通宵达旦的工作下,所有的公路在第二天都铺上了泊油。因此,英特尔公司的首席执行员对政府的反应,留下了深刻的印象,并毫不犹疑的同意,在槟城设立该公司在美国以外的第一座工厂。

其余的,正如人们所说,都成为历史了。

迅速的,美国的许多电子公司,好比得克萨斯仪器公司(Texas Instruments)、摩多罗拉(Motorola)、美国希捷硬件生产公司(Seagate)和西部数据硬盘厂商(Western Digital)先后前来设厂。此外,德国公司,例如欧司朗公司(Osram)和西门子公司(Siemens)也纷纷前来设厂。过后,日本的巨大电器公司松下(Panasonic and Matsushita)更不落人后前来设厂。

由于这些跨国公司在槟城设厂,无形中为该州以及我国其他地区的人民提供了许多的就业机会。当年,我国的失业率非常严重,高达大约 30% ,因为我国当时才经历1969年种族骚乱事件,而正在力求复苏,因此,政府的当前急务是制造工作机会。

在地区方面,当时的整个亚洲也贫穷和不稳定。

泰国不时面对军事政变的问题。中国当时仍然在致力于摆脱文化大革命的滥权。越南战争还在持续着。缅甸、寮国和柬埔寨都陷入内部冲突中。印尼和菲律宾当时仍然由独裁者统治。整个地区 处于了微妙的局势。

槟城英特尔公司是英特尔在美国以外的唯一工厂,这种情况持续了将近30年,直到中国和东欧崛起为止。辅助这些跨国公司的大马电子公司,例如Unisem, LKT 和 MPI 也蓬勃成长。

其他数以百计的中小型企业,也由于供应 制服、膳食、包装、物流、运输以及其他一些专业工程、金融和计算服务,而从经济所消费的数以亿计元中获得利益。

很快的,大马崛起成为了世界首要的半导体外包以及制造中心。

大马的成功,甚至使得在初期比较落后的新加坡也以槟城作为典范。

由于电子业是一种没有导向的工业,只要拥有必要的基本设施,它可以在世界任何地区设立。

不过,幸运的是,大马在1972年就开始设立电子业,而且一直维持为首要电子业业者的地位(直到90年代末期),因为我国继续有所需要,不时调整应对这个行业的需求,适应电子业变化浪潮的需要,以及提供必要的奖掖去吸引这个行业。



图一显示,在上个世纪70年代,幸运的是,英特尔在槟城取得突破,使我国闻名于世,而且很快的成为电子业劳工密集装配活动的理想基地,因为我国当时拥有具有竞争力和良好的基本建设。

在上个世纪80年代,我国吸引了日本和韩国的跨国公司前来我国进行大规模投资(松下公司曾经有一个时期在我国拥有10座工厂),而马来西亚成为了主要的电子与电气设备(例如冷气机、电风扇和电视机)出口国。这是我国致力于推动以出口为导向的成果,此外,我国为外来直接投资公司提供慷慨的税务奖掖(其他国家很快的也仿效我国的做法)。

上个世纪90年代是电子业的蓬勃时期。那个时候,个人电脑和第一代的手机成为了时尚,造成个人电脑的产品,例如光盘驱动器、硬件、电脑的ROM和存储器,以及手机电路板都有庞大的需求。

由于我国一直保持警惕,所以期待着新浪潮的开始。1988 年,当时的首相马哈迪在纽约宣布,对前来我国开展出口业务的外来直接投资公司,撤销一切有关土著和本地股权的条件。许多公司,好比戴尔(Dell)、摩多罗拉 和台湾的宏基纷纷前来我国进行大量的投资,而且它们很快地成为了个人电脑部件和摩多罗拉手机的主要出口商。



图2指出,到了2000 年,我国的出口总值增加到3千370亿令吉,其中电子和电气产品的出口总值达到2千3百亿令吉,占出口总额的 68.2% !

从2000年起就失去电子业的链接

90年代末期,我国还是有所期待,甚至准备迎接下一个蓬勃的新浪潮,因此,我国在1996年设立了多媒体超级走廊,紧接着,再建立塞伯再也电子城。

然而,1997年的金融风暴迫使马来西亚采取资金管制措施。我国通过实行偏低的汇率固定措施,得以使现有的电子公司继续生存,同时电子与电气产品也保住竞争力。不过,这却阻碍了外来投资的流入,而无法制造新的电子活动浪潮。

与此同时,多媒体超级走廊也对具有潜力的投资者,实施许多区位条件和要求,进一步造成投资者对我国裹足不前,不愿意前来投资。

后来,我国因电子业的成功而变得傲慢,因此,我国信心满满,而没有听取世界电子业领袖,例如 贝尔盖茨和施振荣在我国政府于赛城主办的国际咨询会议上所提出的建议和要求。

另一方面,从金融风暴中复苏得比我国还快的中国、新加坡、台湾以及韩国等国家和地区,仿效我国落实的计划,而成为了在新世纪首10年互联网和精明电话蓬勃成长的主要受益国。

图1显示,在 2000年到2010年期间, 马来西亚根本上已经和电子业的蓬勃新浪潮脱离了链接,因为设在我国的电子和电气公司,并没有和新的科技产品,如iPod, iPhone 和黑莓(Blackberry)手机建立显著的链接。 到了2009年,虽然马来西亚的出口总值增加到5千530亿令吉,但是,电子与电气产品的生产基本上已经停滞,出口总值缩减到2千460亿令吉,只占出口总值的44.5%(见图2)。



图3 特别显示出,2008 和2009 年实际上是最后电子产品周期向下转的结束,在2008年,所有主要半导体次领域的资本开销过度缩减30%,而2009年过度减少40%。

半导体在2008和2009年的开销大幅削减,在2009年严重影响了我国外来直接投资的流入(因为我国的工业基础依然是受到电子业支配),而且也是造成在这一年只有13亿8千1百万美元的偏低外来直接投资流入我国的主要原因。

自2000年以来,由于一些国家,尤其是中国提供补助金和廉宜土地等新的奖掖,因此,中国迅速崛起为苹果的产品iPods, iPhones,以及现在推出的 iPads 的设计和制造基地,同时也迅速崛起为主要的光伏制造中心。当然,台湾也成为了手提电脑和电脑附件的主要出口地区,而韩国崛起为世界首要的液晶显示器和纯平电视机行业的业者。此外,新加坡也积极参与,并且从新的生物医药科技浪潮中受惠,因为它在电子生物医药科技领域中吸引了许多的新外来直接投资。

我国应该怎样做才能复苏?

有关方面广泛预测(见图3), 2010 年将是电子产品周期好转的开始。康涅狄格州斯坦福的高德纳咨询公司估计,光是在2010年,所有主要的半导体次领域的开销,将增加超过70%! 这种好转的趋势将持续到2012年以后,而且开销平均每年增加大约20%。

一项对我国经营的许多电子公司进行的访问结果显示,它们在2010年获得的出口订单有了显著的改善。其中许多电子公司正在计划开设新的生产线,同时迫切寻求相关机构的批准,以便把数以千计的熟练工人和数以百计工程师带进我国。到目前为止,他们的申请还在面对移民局的缓慢回应。

政府的当前急务是进行介入,允许这些公司在有限度的框架内带进必要的工人(熟练和非熟练),以便我国可以立刻抓紧电子产品周期好转的新浪潮。这将有助于改善我国的投资环境,进而吸引新的外来直接投资。

我国除了攫取电子产品周期好转的机会之外,也应该迅速调整我国的政策和奖掖,以吸引更多电子投资者在我国的新成长领域,包括太阳能、平板电脑、精明电话、, iPads ,固态照明(LEDs) 以及医药生物科技领域进行投资。

马来西亚工业发展局应该接触这个领域的主要业者(尤其是总部设在加利福尼亚州库比提诺的苹果公司),令他们相信,中国可以为他们提供优惠,马来西亚也可以为他们提供更好的优待。

总而言之,马来西亚必须重夺我国在上个世纪70年代有的创业饥饿与精神。在这方面,我国必须作出更大的努力,为投资者提供比我国的竞争者给以的更好的条件,以便他们可以在我国设立基地。

总部设在美国圣何塞的太阳能公司,已经在我的国会选区,也就是马六甲亚罗牙也建立了一座耗资7亿美元的太阳能电池板制造厂,而德国的贝朗梅桑根公司正计划在槟城建立一座耗资6亿美元的医药制造厂。



不过,在广泛的电子业投资中,这只不过是小收获。

图4显示, iPhone 在全球市场的销量,将从2010 年的3千380万台,增加到2012年的8千万台,在今后2年内增加两倍多。同样的,全球平板电脑的市场将从2010年的1千290万台,增长到2012年的5千零40万台,在今后两年内增加将近4倍!

我国必须提供奖掖(以补助金和企业资金,以及无限制允许熟练劳工,工程师和科学工作者进入我国的方式),这样,大马才能加入苹果、谷歌、微软和主要的太阳能公司(圣何塞太阳能公司和地处加州帕萨迪纳的太阳能电力公司),以及生物科技(例如圣地亚哥的斯克里普斯研究所和索尔克研究所)厂商的供应链,就好像在90年代初期,世界著名手机供应商 - 摩多罗拉的手机在我国设计和生产的年代一样。

放眼未来,马来西亚工业发展局必须保持警惕;也就是对电子业今后崛起的行业、生物和纳米科技的浪潮提高警惕。

虽然我国想方设法使工业多元化,要摒弃电子业,而改为发展其他领域,例如石油与天然气工业、石油化学和新原料,但是,我们必须记得,我国的工业根源来自电子业。

我国在过去40年来建立了庞大的电子基地,使得许多本地半导体制造商,以及一些中小型企业受到了世界的承认。电子业成为了我国的会下蛋金鹅。这只金鹅的呼吸现在逐渐缓慢下来,我们必须使它振作起来,这样,我国才能继续取得迅速的进展。

我国应该派遣大马科学工作者和工程师组成的队伍,前往美国南加里福尼亚州101号公路沿途的奥克兰-圣地亚哥轴心,同时也到波士顿和西雅图地区,向当地的业者传达有关我国崛起的电子业的趋势和资讯。

将在3年内推出市场的纳米、电子、太阳能和生物科技产品,已经在这些地区的科研中心进行了试验和广泛讨论。有鉴于此,我国现在就可以着手设计足以吸引相关厂商前来我国进行投资的奖掖。

只要我国继续保持警惕,采取开放和自由的政策,应付新一波企业人士的需求,以及不要忘记我国电子业的根 (反而必须促进和推动这些根的成长),我国将能够和电子业的新趋势重新链接,进而攫取新浪潮的好转的契机。

这样一来,我国要看到外来直接投资数据的回升,相信是指日可待的。

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