Infineon goes deep in Melaka

• One of few companies that have both front- and back-end manufacturing ops
• Melaka team troubleshoots processes before they are shipped to other facilities in Asia

WITH almost 40 years of history in Malaysia, Infineon has had the same impact in Melaka as Intel has had in Penang. But one can argue that Infineon has gone about its job in a much more low-key manner … in much the same way it began in the state south of Kuala Lumpur.
 
There was no chief executive with his pants and sleeves rolled up, walking barefoot in a paddy field looking into the future at what his shiny new factory was going to look like. That is not the German way.
 
But what is the German way is to produce high quality engineering and deliver peace of mind for customers who use their technologies in the most sensitive of products, such as in the ABS (anti-lock braking system) components found in automobiles.
 
Indeed Dr Matthias Ludwig (pic), the managing director of Infineon in Melaka, says that the need for the highest levels of quality does not even enter the discussion. “For us, it is a market differentiator, this philosophy of German quality.” The bar is not lowered even when this quality mark has to apply to a production line that produces an astounding one million chips an hour! They hit the milestone six years ago.
 
Its defect rate is less than one part in a million and it is working towards a zero-defect ratio. This requires it to do a lot of testing at the end of the manufacturing process to ensure nothing defective gets into the customers hands.

So what exactly is Infineon making for customers in Melaka? For one, semiconductor and system solutions that bring more energy efficiency to existing applications and systems. This both lowers customers’ environmental impact and lowers their operating costs.
 
For example, in the energy value chain, its semiconductor technologies optimize all the steps – from generation through transmission to the actual point of use.
 
In fact, Ludwig says that in Malaysia, Infineon is one of the few companies that have both the front-end and back-end manufacturing operations producing semiconductors used in automobiles, trains, server farms, lighting systems, computers and home appliances, just to name a few.
 
It currently sources 30% its raw material from small and medium enterprises (SMEs) in Kuala Lumpur. The intention is to deepen this link.
 
In other words, Infineon in Malaysia is a key manufacturing center for the German high tech company. Ludwig shares that the wafer fabrication plant in Kulim, in the northern state of Kedah, is Infineon’s first front-end activity outside of Europe. In Melaka, the R&D activities and global IT service support to Infineon are of high value add.
 
The one characteristic that has been a constant in its nearly 40 years of presence in Malaysia is that Infineon has continuously expanded and brought in higher value added products and services, says Ludwig.
 
In fact, he says the Melaka facility is the center of its operations in Asia. Infineon introduces many of its new products and processes in Melaka first and once its engineers get the process all straightened, and kinks ironed out, the particular product will be moved to another facility in China or Singapore.
 
With a workforce of more than 7,100 (approximately 25% of Infineon Group employees), the Infineon site in Melaka assembles and tests billions of highly sophisticated semiconductor devices annually. It is Infineon’s largest manufacturing site with a cumulative investment of approximately RM6 billion (US$1.95 billion).
 
A breakdown of the engineering skills set it has reveals that about 1,091 employees are degree holders with the following breakdown:
 
* 988 (90.5%) are bachelor degree holders;
* 98 (9%) have Masters degrees;
* Five (0.5%) have PhDs; and
* Four engineers are currently pursuing their PhDs under joint research projects with partner universities.
 
Cynics may feel that the relatively lower cost of living in Melaka is still the main draw! Ludwig however says that low cost is not the main driver or only consideration for their manufacturing decisions here. “The key lies in the know-how and innovations, and how we prepare ourselves in moving up the value chain.”

 
In its technology/ product roadmap going forward, Infineon will ask itself some key questions. What competencies does it need to build in Melaka? Can it? What will be relocated to other countries?
 
Ludwig says that innovation is one of the key success factors for Infineon. “We will continue to develop competencies in our people to drive innovation.”
 
The R&D activities in Melaka actually began in 2005 with 40 staff engaged in the development of innovative integrated circuit (IC) packaging solutions, followed by test and product development.
 
“Today, we have close to 300 R&D staff and we are focusing on building competencies and setting up R&D activities in Application Engineering and Test Technologies & Innovation,” he says. University collaboration is on the cards too.