KUALA LUMPUR (Nov 2): German-based X-FAB Silicon Foundries SE is planning to invest US$114 million (about RM500 million) to expand the capacity and capability of its Kuching semiconductor foundry, X-FAB Sarawak Sdn Bhd, between 2015 and 2017, which includes the capital expenditure of US$29 million this year.

X-FAB Sarawak's expansion is to meet the accelerating demand for its core technologies — the 0.18µm and 0.38µm process platforms.

"With the latest investment, X-FAB group will have invested almost US$180 million into the Kuching site since 2006 until 2017, of which US$150 million was spent since 2014," X-FAB Silicon Foundries chief executive officer Rudi De Winter told reporters at the Malaysian Investment Development Authority headquarters here today.

The expansion came on the heels of the X-FAB Group's revenue growth of 25% for each of the past two years; it expects a similar growth for the next two years.

De Winter said it is expected that group revenue contribution from X-FAB Sarawak will expand to more than 50% in 2016.

This year, according to the group's estimation, X-FAB Sarawak should contribute US$147.7 million or 44.18% of the group's total revenue of US$334.3 million.

"We expect [the revenue contribution from X-FAB Sarawak to grow] to US$250 million in three years from now," De Winter added.

Minister of International Trade and Industry (MITI) Datuk Seri Mustapa Mohamed said X-FAB's additional investment is a vote of confidence in Malaysia.

"The company has five plants and the biggest plant is in Kuching. This is not only a vote of confidence in Malaysia, but more importantly, the company has confidence in Malaysia's future and Sarawak.

"[So it's] not just Penang which is attracting electrical and electronic investment but Sarawak as well. This is, to us, an important development.

"Going forward, we are confident that Malaysia will continue to attract foreign direct investment," Mustapa added.

Currently, the capacity for the Kuching site is 24,000 wafer per month and the investment will boost the capacity to 27,000–28,000 wafer per month, De Winter added.

X-FAB Sarawak, formerly known as 1st Silicon and founded by the Sarawak state in 1998, merged with X-FAB Foundries SE in 2006, with the latter owning 61% equity and the state holding onto 35%, and the remaining 4% going into the hands of its customers.

X-FAB Group's core business is in automotive, industrial and medical applications sectors. After the merger, it transitioned X-FAB Sarawak into a high-value-added business for products with a long life cycle from a manufacturing facility for commodity-type products.

De Winter said that X-FAB's wafer is sold all over the world and it has a substantial market share of 25% in its core market in "More-than-Moore", automotive and foundry market.