Chuan Hon Hai and DNeX discuss expansion of 8-inch factory in Malaysia

New developments have come from SilTerra, a Malaysian 8-inch fab invested by Hon Hai. Major shareholder DNeX Group, which has extra land in Kulim's Kedah to build another fab, is said to be in discussions with Hon Hai and its partner Saatchi Investment in Beijing, China.

According to The Edge Markets, a local media in Malaysia, DNeX said Hon Hai would certainly like to study and invest in its SilTerra expansion, but discussions are still ongoing, so the final conclusion is still uncertain. Now the factory has stable production capacity and is looking at the next stage of expansion.

SilTerra has been losing money for several years. In the past nine years, only four of its operations have been profitable. Given the strong demand environment for global chip shortages, the expansion plan is timely. DNeX points out that the plant produced 35000 wafers in October, close to its design capacity of 36000 per month.

DNeX has approved about $68 million for capital expenditure, dedicated to capacity expansion, de-bottleneck processes and the purchase of machinery and equipment, and one of its strategies is to give SilTerra a long-term agreement (LTAs), DneX plans to link 75 to 80 per cent of production to LTAs.

So far, SilTerra has signed up 65% to 70% of its capacity for LTA, so there is room to add another LTA.

After signing a five-year chip supply agreement with Sitronix in August, DNeX revealed that SilTerra had signed another LTA, earlier this week that would be announced soon.

In June this year, Hon Hai announced that it had acquired a 5.03% stake in Malaysia's DNeX through subsidiary investment. As DNeX owns about 60% of SilTerra and indirectly invests in Malaysia's 8-inch fab on behalf of Hon Hai Group, Hon Hai said at the time that it would work with DNeX in the semiconductor and electric vehicle field to expand the group's semiconductor and electric vehicle layout.