It is expected to grow in tandem with the booming semi industry. Despite a potential slowdown in the global automotive sector, industry observers are confident that KESM, the largest independent burn in test and service provider for the local auto semi industry, will not be too affected by such a scenario.
The burn in process is a practice for detecting early failures in semi devices by subjecting the components to both electrical and thermal stresses over several hours. Typically, the burn in test is conducted at the component level when the cost of testing and replacing parts is at its lowest.
KESM has some 70% contribution of its total burn in and test sales from the global auto industry. It supplies specialized semi devices to the world’s reputable auto manufacturers.
Apart from the auto sector, KESM also serves customers and consumer to the communications and consumer sectors.
KESM does not deal directly with the auto players but rather clients which are semi makers supplying to the auto sector.
Semiconductor content are in cars, ranging from the entertainment, GPS, engine management and even driver assistance system is increasing.
Industry observers say it is common practice for semiconductor players to do the testing both in house as well as to sub contract out the service (burn in and testing process) to a third party.
The company has also benefited from forex gains for FY2015.
In May 2015 KESM completed the acquisition of the remaining stake of 34.62% in its 65.38% owned subsidiary KESM Test Sdn Bhd.
KESM also involved in electronics manufacturing service (EMS) however contribution to the group is small.
The company is controlled by Singapore based Sunright Ltd with 48.41% stake.
Any upward pressure in utility costs and minimum wage rates in Malaysia and China will adversely impact KESM profit margins.