43 Management Discussion And Analysis / Business Review DAGANG NeXCHANGE BERHAD Integrated Report 2024 Financial Performance SilTerra recorded a stronger performance in FY2024, underpinned by increased wafer shipment volumes and a healthier product mix. Revenue rose by RM70.6 million year-on-year to RM629.8 million (FY2023: RM559.2 million), driven by a 35,100-unit increase in wafer shipments and a marginally higher blended average selling price of USD527 per wafer (FY2023: USD526). A key highlight was the turnaround in gross profit, which improved from a loss of RM6.7 million in FY2023 to a positive RM37.4 million in FY2024. This shift was mainly supported by higher loading rates and the growing contribution of emerging technologies, which made up 23% of the total product mix during the year. While the business segment remained in a net loss position, the financial performance showed a clear improvement compared to the previous year. This reflects better operational execution and continued momentum in transitioning toward higher-value segments - laying the foundation for long-term profitability and sustainable growth. Key Initiatives and Developments Throughout FY2024, SilTerra advanced several initiatives to enhance its competitiveness and expand its presence in higher-growth, highermargin segments. The central focus was on strengthening its position in emerging technologies, particularly Silicon Photonics, MEMS on CMOS and Life Sciences - all of which are aligned with global trends in AI, data infrastructure, biomedical innovation, quantum computing and smart energy systems. To support this shift, the business segment invested in capacity expansion and equipment upgrades, enabling greater production throughput and the ability to meet increasingly sophisticated customer requirements. Loading improved to 69% in the fourth quarter, indicating improved utilisation and customer demand recovery. SilTerra also deepened its innovation pipeline through strategic partnerships, including: A collaboration with the Indian Institute of Technology (“IIT”) Madras to develop programmable silicon photonic processor chips for quantum computing and nextgeneration communications. Continued collaboration with Interuniversity Microelectronics Centre (“IMEC”), a leading research hub, to accelerate its Silicon Photonics offering. These efforts are part of SilTerra’s broader strategy to shift its product mix toward solutions that offer not just technological advancement, but also commercial resilience. By focusing on niche technologies where competition is less commoditised, SilTerra aims to enhance its value proposition and reduce exposure to pricing pressures common in standard semiconductor manufacturing. Risks and Mitigation Despite improved performance in FY2024, the Technology Business Segment continues to operate in a highly dynamic and competitive environment, with several risks that require active management. Technological Obsolescence and Market Competition Risk Description The semiconductor industry evolves rapidly, with constant pressure to keep pace with new process nodes and advanced packaging techniques. SilTerra faces competition not only from larger global foundries with greater scale and research and development (“R&D”) budgets, but also from emerging players that are agile and increasingly innovative. This intensifies the pressure to continuously invest in advanced technologies and accelerate time-to-market to remain competitive. Mitigation We focus on niche and emerging technologies where leading-edge nodes are less critical, such as Silicon Photonics and MEMS, which are key to next-generation applications in AI, data centres and 5G. To stay competitive, we continue to invest in R&D, equipment upgrades and process innovations to maintain operational efficiency and enhance our technological capabilities. Additionally, we actively engage in technology partnerships to accelerate time-to-market for new products, enabling us to quickly adapt to market demands and strengthen our position in both traditional and high-growth markets. BUSINESS REVIEW
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