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The semiconductor industry underpins nearly every facet of our interconnected world. From powering the smartphones in our pockets to entire industry sectors, semiconductors have emerged as a bedrock of modern society.
Rising adoption of cutting edge technologies means demand for semiconductors looks set to surge yet further. Valued at approximately US$500 billion in 2021, the global semiconductor market is expected to reach US$700–$800 billion by 2026.
It’s a voracious appetite that Ultra Clean Technology (UCT), a supplier of critical components for the semiconductor industry, is working hard to sate with the launch of its new 600,000-meter-square factory in Penang, Malaysia – its 24th global facility.
Plans had already been drawn up before the global outbreak of COVID-19, but with the pandemic in full swing and a global shortage of semiconductors spiraling, UCT’s Senior Vice President of Operations, Thomas Joseph, saw the new facility as a chance to turn the situation to the company’s advantage.
Construction started toward the end of that year, and phase one launched in 2021, with phase two unveiled in 2023.
“Most countries had gone into lockdown and yet we managed this factory construction during this period, within a one-year timeframe,” he tells The CEO Magazine. “The COVID-19 pandemic, though it was difficult, taught everybody a lesson – things are still possible.”
Penang was chosen as the location for the new facility because it was a ‘very mature’ market, according to Joseph. “We also picked it because of the talent pools and the supply chain premises, which are already established there,” he says.
The factory represents a US$53.5 million investment that aims to raise the bar in terms of innovation. UCT has seized on the opportunities afforded by its vast size by installing solar panels across its roof to generate the solar power required to meet its energy needs. By also making the best use of natural light, UCT aims to further minimize its environmental impact.
“This is a state-of-the-art facility and we are tapping into the latest automation and AI technologies,” Joseph says.
Seeing yet more opportunity on the horizon, UCT embarked on a third phase in mid-2023 when it acquired nine additional hectares of land. Upon its completion, the facility could deliver an additional projected revenue of between US$600 million and US$800 million, delivering a significant boost to the community in the process.
It now has 600 employees, and is a major contributor to the local economy with its impact only set to keep growing.
Thomas joined UCT in 2013 after a successful 12-year run with Flextronics in Shanghai, where he rose to Director of Operations. A graduate of India’s Kongu Engineering College, Bharathiar University, Thomas has overseen impressive growth in his more than 10 years with UCT.
Now, he is optimistic about the outlook for the semiconductor industry, despite some recent sluggishness in a sector he labels “very cyclical”.
“Every two-to-three years, you experience a cycle,” he explains. “The year 2023 happened to be the year for the cycle and everybody’s hoping that the industry will now turn to another upcycle.”
Over the long-term, Joseph sees secular shifts as semiconductors are embedded in everything from electric vehicles to smartphones and appliances.
“The technology is continuously evolving and upgrading,” he says. “Companies like UCT and its partners are going to benefit from these shifts.”
The pandemic also prompted Joseph to rethink UCT’s logistics in order to provide business continuity in the face of any future adversity.
“It can be a region, it can be a country, it can be a single operation,” he explains. “So anywhere you have a single point of failure identified, then you have to have a plan to mitigate and minimize the impact if something happens.”
The Penang facility illustrates his point. “We never had any factories in Malaysia two years back. Now a lot of our suppliers or supply chain partners are keen to start to operate in that area,” Joseph says. “We can create a total ecosystem.”
UCT is known for its close relationships with suppliers, which can be crucial in a business as sophisticated as semiconductors, according to Joseph.
“More than a supplier-customer-business relationship, we have partnerships. It’s a technology product and they need to understand it,” he says. “If we do it right, both of us are going to be successful.”
But there is more to the relationship, he says.
“It’s important that they understand our needs and our business so they can play a better role in the total value proposition, which makes both parties successful,” he says.
The digitization of the supply chain is coupled with increasing automation in UCT’s facilities.
“There are a lot of automation projects in the pipeline as we speak,” he says. “We have developed some of the automation systems, mainly to make our people’s jobs much easier and also improve consistency.”
Technology is important for UCT, but finding the right people is imperative for the company, according to Joseph, who sees plenty of competition for talent as the semiconductor industry expands rapidly in South-East Asia.
“Getting the right people at the right time; that’s going to be another one of our challenges,” he says.
Joseph has worked to foment the right corporate culture and work environment at UCT and promotes it as a differentiator between his company and the competition.
“People are continuously going to be key in every business,” he says. “Having the right people and creating an environment where they get excited, and they learn, and they challenge the status quo, and bring new ideas. I think that is key.”
With the right environment, people are self-motivated and produce results, he says.
Part of delivering the ideal conditions to attract and retain the right people is adapting UCT’s approach to better suit the Millennial work ethic and recognize the enhanced role of technology. This involves a rethink of its training platforms.
“Robots are there to supplement many of the human jobs,” he explains. “Now you don’t require the standard training of yesterday. Training requirements are constantly changing. Now, more than training, the new generation are looking more for coaching and mentorship.”
This is a particular passion for Joseph, who believes in developing people in a broad sense rather than restricting their upskilling to certain topics. As a result, UCT is investing heavily in this area.
“Whenever technology changes, we upgrade people’s skills to the latest technology,” he reveals. “What was working well yesterday won’t be enough for tomorrow or the day after tomorrow. Our competitors, maybe they have much more capacity. They can have state-of-art buildings and everything possible, but what they may not have are the people that we have. So we continue to invest in people.”
Along with upgrading skills, UCT encourages employees to challenge the status quo and solve company problems. Joseph applies the principles of Lean Six Sigma, which fosters a collaborative approach to identifying and solving problems.
The industry slowdown has presented an opportunity for evaluating the company and deciding the right way to get things done.
“When you are in a bit of a slowdown period, you know you can sit back and look at what is the right way to get this done,” he shares. “That’s when challenges turn to opportunities.”
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