RECOGNISING OUR POTENTIAL BUSINESS CHALLENGES Moving forward, we remain cognisant of various external factors that may impact our ability to deliver on our objectives. The ongoing Russia-Ukraine conflict has had a significant impact on the worldwide supply of crude oil and led to price spikes that benefitted us in FY2022. However, the rise in crude oil price has also exerted inflationary pressure on raw material costs and impacted SilTerra’s mater ial expenses, in addi t ion to potential ly delaying the supply of maintenance items for Ping. The recent imposition of the energy profits levy on oil and gas ring fence trade in the UK North Sea will likely affect the profitability of Ping moving forward. We are also keeping an eye on the US Federal Reserve’s decisions on interest rates, which have been steadily increasing in order to combat inflation in America and may trickle down to Malaysia, with Bank Negara l ikely to increase its Overnight Policy Rate by a further 25 basis points by year end. Foreign exchange rate fluctuations provide a mixed bag for the Group. The strengthening of the US dollar against Ringgi t wi l l inf late our f inancial performance, as we predominantly operate in USD, whi le any further weakening of the GBP against the USD could lead to higher forex losses for Ping than the close to RM25 million suffered in FY2022. While China’s zeroCOVID policy continues to impact supply chains, we do not expect the impact to be greater than it was in FY2022. On the home front, we are mindful of a potential change in the Malaysian government in the upcoming elections, as it may have some influence on the progress of our upcoming collaborations and initiatives, as well as in collections linked to government projects. OUR FUTURE PROSPECTS Energy Information Technology Technology Technology: Aiming To Capture A Global Stake In The Semiconductor Supply Chain Leveraging on the strong turnaround we achieved at SilTerra in FY2022, as well as the projected continuing increase in global demand for semiconductors of 11 per cent in 2022 and 9 per cent in 2023, we believe the time is ripe to cement our position as a key player in the global semiconductor supply chain. Our approach will be focused on four key strategies. Firstly, the expansion of our capabilities at SilTerra to include MEMS technologies and SiPh, both of which offer higher profit margins compared to our current offerings, will open up new markets in cutting-edge and omnipresent industry sectors such as electric vehicles, 5G telecommunications and advanced healthcare equipment. Secondly, we are in discussions with Taiwanese tech giant Hon Hai Precision Industry Co Ltd (“Foxconn”) to build and equip the first 12-inch wafer fabrication facility of its kind in Malaysia, which will produce 28 nanometre Tier 1 Technology nodes with wide applications in mobile phones, 5G networks, electric vehicles and IoT devices. We are also in discussions with a Europe-based research and development organisation to establish a Joint-Semiconductor R&D Centre in Malaysia that is slated to be a world-leading centre of research, development and innovation in advanced semiconductor and system scaling, silicon photonics, artificial intelligence, beyond 5G communications and sensing technologies. All of these efforts will be further supported by the planned establishment of an innovation fund that is aimed at expanding our presence across the semiconductor supply chain from design, development and wafer production into assembly, testing and packaging, and other precision engineering services in the near future. We believe these two facilities will play an important role in elevating Malaysia’s status as a pioneering entity in the global semiconductor supply chain, and we are optimistic of securing the necessary government support for our initiatives going forward. 33 DNeX INTEGRATED REPORT 2022
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