KUALA LUMPUR: Dagang NeXchange Bhd has outlined short, medium and long-term plans to transform SilTerra Malaysia Sdn Bhd under its updated takeover plans.
Sources said DNeX and consortium partner Beijing CGP Investment Co Ltd, in their updated bid presented to Khazanah Nasional Bhd, planned to invest nearly RM1 billion in the troubled government-owned semiconductor firm by 2023.
The companies would first focus on business, financial and operational turnaround of SilTerra over 24 months, they added.
Over the medium term of two to five years, the DNeX-Beijing CGP consortium will encourage interest in electrical and electronics (E&E) and semiconductor sectors via a RM150 million innovation fund.
The consortium will also form a strategic partnership with national applied research and development centre Mimos Bhd to invigorate interest in the semiconductor and E&E sectors.
The partnership will allow SilTerra to focus on its commercial fabrication activities while Mimos can focus its strength as industry enabler in the areas of R&D and tech development, engineering, experimental FAB and small scale production.
The long-term plan of up to 10 years will entail efforts to position SilTerra as the nation's Unicorn and to leverage on its unique's position to build semiconductor industry eco-system witn the help of Beijing CGP and its limited partners' network of semiconductor companies.
"SilTerra can be Malaysia's US$1 billion Unicorn for technology companies by 2025. With production achieving near designed capacity for SilTerra's FAB-1 of 40,000 wafers per month (wpm) and FAB-1E of up to 10,000 wpm, revenue can increase to US$300 million with a net profit of US$75 million at a valuation at US$1.5 billion," a source said.
The New Straits Times previously reported that Khazanah had received four bids for SilTerra including from Taiwan's Foxconn and Germany's X-FAB Silicon Foundries before the earlier deadline for submission on July 31, which was later extended to October 9.
The other two were DNeX and Green Packet Bhd.
The initial proposal from DNeX and Beijing CGP was focused on planning and executing SilTerra's turnaround with a total investment of RM846 million.
The sources said the consortium would immediately inject new capital of RM200 million to upgrade SilTerra's plant and equipment to remove single point of failures, as well replace equipment which require high downtime maintenance and for working capital.
An additional RM300 million of new capital is in the pipeline after year three to further increase SilTerra's capacity to serve expanding market when business condition improves.
Together with a RM260 million cash consideration to Khazanah and RM210 million to assume SilTerra's borrowings as at December 31 2019, DNeX and its strategic will potentially invest RM970 million by 2023.
"The DNeX-Beijing CGP proposal is expected to bring significant socio-economic impact to the development of semiconductor industry in Malaysia," the source said.
DNeX's 60 per cent stake in the consortium represented the highest Malaysian and Bumiputra equity content compared to other bidders, ensuring that SilTerra remain in the local hands, the source added.