Revisiting Malaysia's technology and R&D-related policy studies and findings from 1990-2012 - review of effectiveness towards the technological capabilities of companies and industrial development by Dr Norlela Ariffin [email protected], hp +6012 200 2871 Senior VP, Excellent Spring Sdn Bhd Director, Penang Women Development Centre (PWDC) International Symposium on Accelerating Innovation in Developing Countries KL Convention Centre, November 3, 2012 Session 3: Measuring innovation and its socio-economic and environmental impacts
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Revisiting Malaysia's technology and R&D-related policy
studies and findings from 1990-2012 - review of effectiveness towards the technological capabilities of
Revisiting Malaysia's technology and R&D-related policy studies and findings from 1990-2012 - review of effectiveness towards the technological capabilities of companies and industrial development
This paper revisits my research on Malaysia’s technological and R&D status since 1990 till 2012:
• Intensification of Research Areas in Priority Areas (IRPA) project: An Evaluation of R&D Programs under the IRPA Mechanism Financed in the Fifth Malaysia Plan - UUM Survey (1992).
• IRPA program on the ‘Development of Advanced Semiconductor Package’ (2006-2007)
– Re-activation role as new industry partner; full-time on-site research on ‘3D Quad Flat No-Lead Semiconductor Package’ for 1 year at AIC semiconductor plant commenced in December 2006.
• - Program members: AIC Semiconductor Sdn Bhd (new industry partner), University Kebangsaan Malaysia (new program leader), University Malaya and AMREC (Advanced Material Research Centre, SIRIM).
• The World Bank-Ministry of Science, Technology and the Environment ‘Review of the National Technology Development Policy, Malaysia: Output 5 - A Demand-Driven Perspective on Industrial
Technology Policy in Malaysia’ (1995). • - As Consultant, East Asia & Pacific – Country Department I (EA1), World Bank.
• UNDP program: ‘Technology transfer to Malaysia: A study of electronics and electrical firms and the supporting industries in Klang Valley’ (1995/1996)
• Corporate Sector Survey on Productivity and Investment Climate Study: Innovation Capability Audit Survey (2003). Report by MIGHT for the Economic Planning Unit, Prime Minister’s Department, Malaysia.
• - As lead consultant and collaborated with Prof Micheal Hobday (SPRU-CENTRIM) who benchmarked leading companies in Korea and Thailand.
• Norlela Ariffin (2003). Initial policy prescription proposal for E&E industry: Spearheading the growth of analog design capabilities in Malaysia : EPU Innovation Audit - Policy Paper submitted to Dato’ Halipah Esa, Deputy Director General (Macro), Economic Planning Unit, 26 March.
• : ‘Learning Processes and Technological Capability-Accumulation Paths: Firms in the Electronics Industry in the Industrial District of Manaus, Brazil’. • • National Technology Mapping Programme II: Wood, Machinery and Food (2002). Report by PRIMA for the Economic Planning Unit, Malaysia.
– As project managing consultant – Study involves competency audit survey of companies, formulating technology roadmaps and conducting international benchmarking.
Norlela Ariffin (2011), ‘Innovating up to speed’, Penang Economic Monthly, May, Issue 05.11, pp. 8-17.
• Norlela Ariffin currently promotes social innovation that will increase the income of single mothers and women in rural and urban poor areas at the Single Mothers and Women Cooperative in mainland Penang and the Women Development Corporation (PWDC) by commercialising innovative university research in Penang and promoting biomass utilisation into productive economic generation.
• Corporate Sector Survey on Productivity and Investment Climate Study: Innovation Capability Audit Survey (2003). Report by MIGHT for the Economic Planning Unit, Prime Minister’s Department, Malaysia.
• - As lead consultant and collaborated with Prof Micheal Hobday (SPRU-CENTRIM) who benchmarked leading companies in Korea and Thailand.
• Initiated and collaborated with the Selangor Human Resources Development Centre (SHRDC) to secure special funding for AIC Semiconductor Sdn
Bhd for the ‘QFN semiconductor packaging Pilot Line’ under the Graduate Re-skilling Training for the ‘Masters by Apprenticeship’ degree program, 2005.
•
• “MECD Study on Entrepreneur Development at the Corridor Development”, • 28th December 07 till March 31 2008 • • As Project and Research Advisor to Innovation Associates (iA Group), 49th floor, Petronas Tower 2, KLCC, 50088 Kuala Lumpur Ariffin, Norlela (2010) ‘Internationalisation of technological innovative capabilities: levels, types and speed (learning rates) in the electronics industry in
Malaysia’, Int. J. Technological Learning, Innovation and Development, Vol. 3, No. 4, pp.347–391.
• Full-time member of the Sustainable Urban Development (i.e. Waste Management) City & Corridor PEMANDU Lab – Northern Corridor, Sept 2nd -
Nov 4th 2011. • Consultant to Malaysian Industry-Government Group for High Technology (MIGHT) to develop for the Malaysia Biomass Action Plan that would focus
on sustainable production and SMEs, 2012.
The question of how Malaysia can move to the next high stage of development and innovation-driven economy is:
• To increase factors that contributes to the
increase of global competitiveness.
• The other approach, which can be implemented simultaneously, is to look at Malaysia’s existing strengths and to focus efforts on strengthening them.
• A third approach is to focus on the current realities of where companies and industries are and where they will be on their next thresholds.
Law promotion of SME Innovation (2001): 14,626 Korean SMEs have received Innobiz certification (as of end 2008) 1. Manufacturing 2. Services/Non-Mfg 3. Agriculture 4. Construction 5. Environment 6. Biotech 7. Software 8. Design
Tech Policy Impact to GDP after Financial Crisis
Law promotion of High-Tech Start-Ups (Venture Business) (1998)
In order for Malaysia as a whole to achieve high-income status, it is useful to examine factors which contributed to the global competitiveness of 144 countries over time, as ranked in the World Economic Forum’s Global Competitive Ranking.
Rank INDICATORSCURRENT
WEIGHTAGE OF MALAYSIA
FUTURE / TARGET WEIGHTAGE OF
MALAYSIASub Indicators Beta
RSquared
1
Microeconomic Competitiveness
(MICRO) 0.35 0.48
Factor (Input) Conditions
Communications Infrastructure
Telephone Lines per 100 population
0.036 0.848
2 Context for Strategy and Rivalry
Context for Strategy and Rivalry
Regulatory Quality 0.851 0.841
3 Factor (Input) Conditions
Communications Infrastructure
Mobile Telephone Subscribers per 100 population
0.023 0.833
4 Innovation Infrastructure
Utility Patents per Million Population
0.256 0.825
5 Company Operations and Strategy (COS)
Strategy and Operational Effectiveness
Production Process Sophistication
0.615 0.817
6 Factor (Input) Conditions
Communications Infrastructure
Internet Access in schools 0.471 0.816
7 Logistical Infrastructure
Quality of Electricity Supply 0.463 0.812
8 Social Infrastructure and Political Institutions (SIPI)
0.42 0.36
Rule of Law Rule of Law (WB)****** 0.678 0.811
9 Control of Corruption (WB)*****
0.612 0.798
10 Human Capacity Human Capacity Life Expectancy 0.068 0.793
Increasing factors that contribute to the increase of global competitiveness - based on data from 144 countries over time
• It is significant to note that factors ranked highly as contributing to global competitiveness are a combination of infrastructure (Telephone Lines ranked at #1 and ‘Internet Access in Schools’ at #6 – this bodes well for Penang through the free WIFI provided by the state government),
• ‘Utility Patents’ are ranked highly at #4. A utility innovation is an exclusive right granted for a "minor" invention which is not required to satisfy the test of inventiveness which is required of a patent (a patent is protected for 20 years from the date of filing while a utility innovation is protected 10 + 5 + 5 years from the date of filing subject to use).
• ‘Production Process Sophistication’ ranked at #5 in which Greater Penang and Klang Valley are famed for having the fastest production ramp-up times in the world. That is why when new production plants were being set up in China in the early 2000s, Malaysians were transferred from MNC corporate offices to fill key managerial positions.
• On the other hand, ‘Technology Transfer and FDI’ is ranked at the fourth lowest factor at #119 out of a total of 122 factors examined.
• This may prove to be significant in the future as the industrial growth of Greater Penang, Klang Valley and the rest of Malaysia’s industrial growth have been primarily driven by FDI.
Table 3: FDI and Technology Transfer’ is among Least Significant Factor to Global
Competitiveness
Source: Analysis based on the World Economic Forum (2008-2009).
• Of other greater significance are Good Governance Factors such as ‘Rule of Law’ and ‘Control of Corruption’, ranked #8 and #9, respectively.
• Problematic factors for doing business are shown in Figure 1. Figure 1: Problematic Factors for Doing Business in Malaysia
Source: Global Competitiveness Report 2008-2009, World Economic Forum
Reinforcing Malaysia’s Existing Strengths
• Moving Malaysia to the next stage of development is also about looking at Malaysia’s existing strengths and to focus efforts on boosting these, as well as focusing on the current realities of where companies and industries are and where they will be on their next thresholds.
• In 2010, Penang received the highest level of foreign direct investment in
Malaysia with Selangor bringing in the second highest amount.
• Penang and Klang Valley have the highest concentration of employment and the most established electronics industry in Malaysia.
• Currently, Malaysia is among the world’s five largest exporters of semiconductor devices, and 96.3% of semiconductor companies are foreign-owned or MNC subsidiaries.
Build Up Routine Production Capability To Produce
More Complex, Higher Value-Added Products
2
Production Capability
Level
More complex, higher
value-added products :
digital, DVD, flat-
screen CTV, CDMA
LP-link MP-link
LP-link MP-link
Office & computer
equipment
LP-link MP-link
1
LP-link MP-link
Consumer Electronics (Analogue)
Parts to Full Assembly
Starts with a few
relatively simple discrete components,
analogue products, parts assembly, SKD,
1970 1980 1990 2000 Time
1st Dimension of Technological
Development
12
Contract or Sub-Assembly
Manufacturer
Solectron
Flextronics
Celestics
SCI
Sanmina
Plexus
Jabil
ACT
Local: UNICO, BCM,
AIS, AIC Inspirasi
Chip/Component
Manufacturer
Infineon
Philips
Lucent
ST Micro
Motorola
Intel
SIS
Sony
Liteon
Asus
Sampo
Compal
Outsourced Chip
Manufacturer
Wafer foundry:
TSMC
UMC
CSM
Tower
Local:
Silterra
1st Silicon
On semiconductors
MIMOS
Components
Assembly & test:
Amkor,
ASE
SPIL
STAT-ChipPAC
Local:
Carsem
Unisem
Globetronics
AIC Semicon
OEM
Sony
Cisco
Nokia
Philips
Sharp
Dell
Panasonic
HP/Compaq
IBM
Local:
Pensonic
iBhd
Khind
AIC Display
End User
Semiconductor
Electronic
Components
Consumer
Electronics
Local:
LKT
Cosmo
Greatech
Pentamaster
Eng Technology
Numac Machine
Tool Prodelcon
Assembly
& Test
Semiconductors
& Components Electronics Sub-Assembly
& Contract Manufacturer
Consumer & Industrial
Electronics
Source: adapted from Oracle, Asia Pacific, 2002
Smartcard
modules & Semiconductor
Wearable 3D displays
42” & 50” Plasma TV
Capital
Goods
Current and future industrial products’ progression?
Use our own indigenous resources as a
competitive advantage such as Biomass to Malaysia as a small tropical developing
country like Costa Rica grow rich (increase GDP and become developed nation),
distribute wealth (social) and keep our Environmental commitment (40% reduction
• Green Waste in urban areas (housing , highways e.g. Penang has 500 tons per day with the growing of more trees (5,000 trees) in urban areas, there will be more green waste. Though officially closed in 2002, the Jelutong landfill continues to receive 1,350 tons of C&D and green waste daily. The waste is not buried but left in the open. •Leachate in landfill can be used immediately as feedstock for biogas • Agro-farming waste – rural areas – bananas, pineapples, etc. •Food waste – Greater KL and Penang each produce 1000 tons of food waste per day • Palm oil waste from private mills Sewage sludge (toxic – copper and lead) - currently dumped into the landfill and sea. In Penang island, 50 tons per day. Singapore and China use sewage sludge to make cement for their buildings, and for energy generation.
Weakness Sustainable high-volume long-term contract of palm oil-based feedstock is controlled by big palm oil plantations
Opportunities: Food Waste into Green Chemistry and bio-solvents Green waste into Eco-pulp and paper products Waste into Bio-ethanol and bio-fuel Leachate in landfill into biogas Our biomass SMEs to expand overseas where biomass feedstock for energy is plentiful (sawdust as energy feedstock – Canada, US, Sweden, Brazil, China) Partnering with cost-effective and commercial bio-refinery companies that turn waste into bio-solvents, pulp and paper, green chemical, bio-ethanol and bio-fuel .. Euro 20m for bio-refinery and R&D in Finland.
Threats Most European and US international bio-fuel and bio-ethanol companies are only interested in cheapest sugar (not biomass) feedstock 20 cents/kilo. Large Taiwan industrial flour companies are only interested in cheapest crude banana flour 60 cents/kilo compared to RM20/kilo
So much ends up in waste
What do we do with our waste?
What a waste!!
Malaysia • 95% landfill, • 5% recycled (JSPN).. but industry says recycle is 15% (Pemandu, 4/12) • 45% is food waste
25,000 tons/day of waste is generated in Peninsular Malaysia in 2012 based on projections in the National Strategic Plan. 45% if food waste
Food Waste - we need to encourage the usage of this chemically-rich resource & source of functionalised carbon
25,000 tons/day of waste is generated in Peninsular Malaysia in 2012 based on
projections in the National Strategic Plan. (Pemandu-JSPN Waste Management Lab Report, April 2012). Malaysia generates 21,000 tons per day of which 17,000 tons are collected by local authorities (Final PEMANDU NCER C&C Lab Report, March 2012) 45-50% comprised of food waste that is dumped into the landfill (Pemandu GKL Lab Report, 2011, C&C NCER Lab Report, March 2012)
•in the UK, over 90% of the 5.7 Mt of commercial and industrial Food Waste is
discarded to landfill. 90 Mt of food waste generated every year in the EU incl. industrial and household food waste, or 179kg per capita
Thus, there is available source of functionalised carbon. Most is landfilled, and it
if isn’t landfilled, it is used for 1st generation, lower-value applications such as
compost, anaerobic digestion or animal feed.
Electricity - 670 kwh of energy is produced per ton of organic waste
Cost of Waste in Malaysia (source: Waste Mgnt Lab, April 2012 from JSPN)
Increasing amount of solid waste
- 25,000 tons/day waste generated in
Peninsular Malaysia in 2012 based on
projections in the National Strategic
Plan.
- Only an estimated of 5% recycled.
Source separation scheme ongoing but
still at early stage.
Landfills are the only disposal means in
Malaysia
- 95% waste land-filled. Around 300 sites
but only 60% in operations.
- Not more than 10 sanitary landfills have
been built (vs 22 specified in NSP).
Current treatment and disposal methods are
not environmental friendly
- Dependence on landfills will increase
CO2 emission by 50% in Peninsular
Malaysia by 2020
- Incinerators releases toxic gases like
dioxins
Current state of affairs
Urgency to move away from landfills -
• lack of areas for new landfills especially within major conurbation and corridors
• landfills increase Methane and GhG emissions causing climate change
• negative public perception on landfills
New sustainable SWM technologies are required to address environmental issues.
Emerging technologies are available and looks promising but viability needs to be verified.
Not from Food Quality feedstock, instead use Food Waste
Extractables
(secondary metabolites from straw) Materials
(primary metabolites – starch, cellulose)
Bulk Chemicals
((Bio)chemical processing of bulk materials/residues)
CH
EMIC
AL
PO
TEN
TIA
L TE
CH
NO
LOG
IES
AD
DIN
G V
ALU
E
Biomass including food and agro-wastes
Benign Extraction Methods
Separation/Purification
Green Chemical Transformation
Expansion Methods
Green Chemical Modification
Composites
Selective Fermentation
Controlled Pyrolysis
Extraction Technology
(Bio)platform molecules
Green Chemistry/technology
Pressures on the Chemical Industry Across the
Lifecycle
The The Chemical industry is too dependent on traditional virgin sources of raw materials.
So instead, use food waste as the raw material
Methodology - Indicators
EPI Rank EPI
Rank
EPI
Score▼ Country
EPI
circa
2000
EPI, Most
Recent Year
Available (2010)
Percentage
Change
EPI Pilot
Trend
Rank
EPI Pilot
Trend
Score
1 76.69 Switzerland 76.2 76.7 0.51 89 2.42
2 70.37 Latvia 63.8 70.4 7.35 1 18
3 69.92 Norway 68.1 69.9 1.91 84 2.95
4 69.2 Luxembourg 68.8 69.2 0.4 106 0.26
5 69.03 Costa Rica 66 69 3.35 113 -0.52
6 69 France 62.3 69 7.62 19 11.02
7 68.92 Austria 67.9 68.9 1.11 71 4.38
8 68.9 Italy 63.2 68.9 6.37 12 11.31
9 68.82 United
Kingdom
61.2 68.8 8.73 20 11.01
9 68.82 Sweden 66.4 68.8 2.68 63 5.44
How A Tiny Central American Country Is Getting Richer And Saving The Environment • Uses 99.2% renewable energy • GDP growing for decades • Started with the disband of its military in 1948, resulting in military funds channelled instead on investment into social and environmental programs
• Transformed itself from one of the most deforested nations (29%) in the Western hemisphere to one with Forest cover 52% its area
• Costa Rica has accomplished in the past 30 years to save the environment and prosper
Malaysia EPI Rank: 25 Pilot Trend EPI Rank: 33
• Population: 28,401,017, Land Area (sq. km.): 331,235 GDP Per Capita: $13,186
• Costa Rica: EPI Rank: 5, Pilot Trend EPI Rank: 113 Population: 4,658,887, Land Area (sq. km.): 51,452, GDP Per Capita: $10,258
Countries with similar levels of performance:
• New Zealand
• Ecuador
• Germany
• Portugal
• Australia
Countries with similar trend performance, 2000-2010:
Comparing performance when invested capital is low
What is Technological
Capability?
a) Routine Operating Capability:
Capability to use existing technology
b) Innovative Capability:
Capability to generate & manage change
2ND Dimension of Technological Development
Adapted from Hobday (1999). ‘Understanding innovation in electronics in Malaysia’ In Jomo, Felker & Rasiah (eds) Industrial Technology Development in Malaysia: Industry & Firm Studies, Routledge, UK)
PCB Design Testing
PCB Assembly Prototyping
PCB Fabrication
PCB Layout
Sub-System Circuit Design & Simulation
Semiconductor Packaging
ASIC/SoC Fabrication
FPGA Test and Debugging
FPGA Programming
Pre-Compliant Testing
FMEA Reliability
Testing
Functional Testing
Prototype Build and Integration
Rapid Prototyping
Kinematics Simulation
3D Design, Modeling , and
Rendering
Semiconductor Circuit Design
Market Feasibility
Test & Debugging
Software Coding
Architecture Design
Pilot Run & Mass
Production
Product Certification
Product Design (Mechanical)
Application & System Design
(Electronics) Semiconductor
IC Design
Product Testing
Mould & Tooling Design
Trial Testing
Product Design (Concept)
Internal Qual (JEDEC)
Prototype & Full Solution
Proposal
Design and full characterization
Material matrix & stress
modeling
Product & Process
Requirement
Semiconductor Packaging Design
Product Definition &
Tolerance Level
Appearance & Component Specification
FMEA
Design for Mfg. & Assy.
Design Rule Fix & Doc.
Application & System Design
(Software)
Failure Analysis & Reliability
Testing
Pilot Run
Pilot Run
Customized Production
Machineries
Design & Development Activities in the Electronics Industry in Malaysia
IC Design Support
Front-end Design Service
Back-end Design Service
Analog IC Design Service
Digital IC Design Service
Mix-Signal IC Design Service
RF IC Design Service
Source: author’s research update in 2008 and 2010
ROUTINE OPERATING CAPABILITY IN THE ELECTRONICS
INDUSTRY
Types Of
Capability
Levels
Of Capability
Project
Management
Equipment, Tool &
die, metal stamping,
plastic moulding
Process and Production
Organisation
Product- centred
ROUTINE OPERATING CAPABILITY: THE CAPABILITY TO USE EXISTING TECHNOLOGY
BASIC
OPERATION
Level 1
Engaging prime
consultant.
Preparation of
initial project
outline.
Construction of
basic
civil works.
Simple plant
erection
Purchase
equipment
Recruitment.
Basic maintenance
but equipment
suppliers stationed
at plant.
SKD (semi-knocked down):
parts assembly, only final
assembly.
Assemble kits: dissamble
and re-assemble kits.
PPC: production planning
and control.
Organising basic process
flow. Visual testing only.
Routine QC to maintain
basic standards: in-
coming, final product
inspection, out-going
inspection.
BASIC
OPERATION
Level 2
Installation,
maintenance,
servicing,
Simple
customising of
existing
systems.
Basic plant
erection
Routine
maintenance of
tools and
equipment. Total
Preventative
Maintenance (TPM).
Total Productive
Maintenance.
Replication of
unchanging
items of
equipment.
Process flow, line
balancing.
Assemble separate parts
into complete assembly
CKD (complete knocked
down): complete assembly:
PCBA and product
assembly.
Efficiency improvement
from experience in
existing tasks. Routine
testing.
Replication of fixed
specification
Routine QC to maintain
existing standards: in-
line QC
Minor clean-up of design
to suit production or
market.
TECHNOLOGICAL CAPABILITY IN THE ELECTRONICS INDUSTRY
Types And Levels
Of Capability
Project
Management
Equipment Tool & Die, Metal Stamping, Plastic
Moulding
Process And Production
Organisation
Product- Centred
Routine
Production capability
Level 2
Installation, maintenance, servicing.
Simple customising of existing systems.
Basic plant erection.
Routine maintenance of tools and equipment.
TPM. Replication of unchanging
items of equipment.
Process flow, line balancing. CKD Efficiency improvement
from experience in existing tasks.
Routine manual testing.
Replication of fixed specifications Routine QC to maintain existing standards. Minor clean-up of design to suit production or market.
Basic innovative capability
Level 3
Systems integration.
Provide project management services to customers.
Providing customised software solutions
Repair & trouble-shoot equip problems
Copying and simple adaptation of existing designs/ specifications.
Set-up Equipment Design, Tool, Die & Mould Development. Engineering/fairly precision metal and plastic parts.
Set-up of Process, Production or Industrial Engineering Dept/s. Improved layout & debugging to optimise production. ISO9002, SPC, QCC, TQM, Do in-circuit testing, burn-in. MRP or JIT systems.
Set-up of Product Engineering, Product Design dept/s. Product design for manufacture (DFM), Cost-effective, incremental product development for local or different markets. Cosmetic and mechanical design.
TECHNOLOGICAL CAPABILITY: THE ELECTRONICS INDUSTRY
Types And Levels
Of Capability
Project
Management
Equipment Tool & Die, Metal Stamping, Plastic
Moulding
Process And Production
Organisation
Product- Centred
Intermediat innovative capability
Level 4
Software development. Project management of large-scale investment projects, international investments.
Develop automated equipment. Equipment Design Centre upgraded to separate firm. Mould & die design. High precision tooling, progressive metal stamping, plastic injection moulding.
Automation of processes Flexible & multi-skilled production. Business process re-engineering. Dev new process specifications. Able to transfer to production directly from R&D design or drawing.
Design Centre upgraded to separate firm.
Own product design for local or regional markets.
Electrical, PCB Chassis, Chip-on-board, Platform designs. Design for testability and debug-
DFT/DFD ISO9001 Software development Systems engineering.
Advanced innovative capability
Level 5
Projects management on a
global scale. Full turnkey
solution. Recognised training & service centres to
TNC Group, customers or
suppliers.
R&D for specifications and designs of new high precision tools, complex automated equipment or
production systems. Patents. Set-up of recognised training
institutes in precision tool & die, or precision plastic moulding
with universities.
Radical innovation in organisation.
Own-developed CIM with customers, vendors or Group.
In-depth Failure Analysis. Developing manufacturing, FA and TestCAD software tools, Patents.
Substrate and piece parts design. Materials and surface analysis.
Upgraded to regional or worldwide Design Centres or world product
mandates. Providing design services to TNC
Group or customers.
INNOVATIVE CAPABILITY: THE ELECTRONICS
INDUSTRY IN MALAYSIA
Types And
Levels
Of Capability
Project
Management
Equipment
Tool & Die, Metal
Stamping, Plastic
Moulding
Process And Production
Organisation
Product- Centred
Research
based innovative capability
Level 6
Fast time-to-design cutting-edge and hi-prec equipment to produce latest or cutting-
edge products and components
Is among regional or global leader of CNC complex
equipment, high precision tooling, stamping, die &
mould, prototype models.
Process and software development to produce &
test high yield, miniaturised and higher
performance HDD products and chips.
Time-to-volume production.
Research into advanced material and new
specifications to produce future or cutting-edge
products.
Is a leading regional or international R&D,
product development, ASICs or software design
centre/s. R&D into new product
generations using leading-edge technology,
larger wafers, higher performance HDD &
chips. R&D into more uniform
crystal growth, improved magnetic orientation, advanced materials.
Source: Norlela Ariffin (2000). ‘Internationalisation of Innovative Capabilities: The Malaysian Electronics Industry’. PhD Dissertation, SPRU, University of Sussex. Framework is based on actual activities of firms in the Malaysian electronics industry, and adapted from Bell and Pavitt (1995).
RESEARCH-BASED CAPABILITY: THE ELECTRONICS
INDUSTRY
Greater Penang (Penang, Kedah, Perak) and Klang Valley
• The selection of the two most established locations has allowed for testing of the importance of location and industrial clustering. Penang has the highest regional distribution index for the electronics industry, an index that measures the concentration of industries based on sectoral employment, employment concentration ratio and value-added per worker. Almost one-third of the whole industry’s employment is in Penang (other concentrations of the electronics industry are in the Klang Valley and Johor).
• It would be expected that firms operating in the
Greater Penang area would have higher technological capability levels due to greater clustering and networking effects than firms in the Klang Valley.
Table 4 Statistical Results Of Factors Influencing Technological Capability Levels
Significance level: * between .05 and .1, ** between .01 and .05, *** less than .01
Based on Table 4 and data drawn from 53 firms in Greater Penang and Klang Valley interviewed.
The statistical results do show that there is a significant difference in technological capability levels between the two regions. Penang firms overall, have higher technological capability levels than those in the Klang Valley. However the differences between MNC subsidiaries in the two locations, as well as between local suppliers linked to MNC subsidiaries, and between local independent firms are not significant.
Penang and Klang Valley Goodness-of-Fit
Chi-Square df Sig.
Pearson 23.982 9 .004
Deviance 28.411 9 .001
Link function: Logit.
MNCs versus Local Firms
• MNC subsidiaries and local suppliers linked to MNC subsidiaries in Greater Penang have higher average numbers of R&D staff (85 and 25 staff, respectively) than those in the Klang Valley. But local independent firms in the Klang Valley have a higher average (43 staff) than those in Penang.
• These differences may be due to the types of product manufactured, length of operation or other factors. Even though the numbers of people are less than those in developed countries, these numbers are gradually increasing - some firms that started with three personnel in the 1970s had as many as 200 R&D staff by the late 1990s; in 2008, Intel in Penang had 1,200 staff in the Intel Design Centre.
Table 5 Average Number of R&D Staff In Firms Interviewed
Group Group 1
TNC
Subsidiaries
Group 2
Local
suppliers
linked to
TNC
subsidiaries
Group 3
Independent
firms
Total Local
Firms
Total
Region KV Penang KV Penang KV Penang KV Penang KV
2215
Penang
2295
Mean
Employee
2634
4088
93.3
481
2315
1003
1760
630
R&D
staff
60 85 4 25 43 10 33 18 47 71
72 11 38 30 56
PCB Design Testing
PCB Assembly Prototyping
PCB Fabrication
PCB Layout
Sub-System Circuit Design & Simulation
Semiconductor Packaging
ASIC/SoC Fabrication
FPGA Test and Debugging
FPGA Programming
Pre-Compliant Testing
FMEA Reliability
Testing
Functional Testing
Prototype Build and Integration
Rapid Prototyping
Kinematics Simulation
3D Design, Modeling , and
Rendering
Semiconductor Circuit Design
Market Feasibility
Test & Debugging
Software Coding
Architecture Design
Pilot Run & Mass
Production
Product Certification
Product Design (Mechanical)
Application & System Design
(Electronics) Semiconductor
IC Design
Product Testing
Mould & Tooling Design
Trial Testing
Product Design (Concept)
Internal Qual (JEDEC)
Prototype & Full Solution
Proposal
Design and full characterization
Material matrix & stress
modeling
Product & Process
Requirement
Semiconductor Packaging Design
Product Definition &
Tolerance Level
Appearance & Component Specification
FMEA
Design for Mfg. & Assy.
Design Rule Fix & Doc.
Application & System Design
(Software)
Failure Analysis & Reliability
Testing
Pilot Run
Pilot Run
Customized Production
Machineries
Design & Development Activities in the Electronics Industry in Greater Penang & Klang Valley
IC Design Support
Front-end Design Service
Back-end Design Service
Analog IC Design Service
Digital IC Design Service
Mix-Signal IC Design Service
RF IC Design Service
Source: author’s research update in 2008 and 2010
Figure 4 Research update in October to November 2008:
innovation audit of front-end semiconductor and electronic design centres/firms
30%
12% 15%
18%
3% 0% 0%
3%
18%
0%
5%
10%
15%
20%
25%
30%
35%
0
2
4
6
8
10
12
% o
f C
om
pan
ies
No
. of
Co
mp
anie
s
Value Chain Positions of Companies Surveyed
Source: author’s research update with Robert Tai based on MIGHT
Innovation Audit in Sept-Oct 2008
• The recruitment forecast conducted in 2008 for Design and Development staff over the next five years (2009-2014) is expected to increase. However, year 2009 was expected to experience a slight dip in recruitment, partly due to the not so favourable sales forecast due to the global financial crisis in 2008. The expected year-on-year growth is about 6%.
Figure 2: Research Update in October 2008
The types of new recruits are centred on IC design and application software and hardware engineers. There is also a strong emphasis on
non-technical related recruits as well
How long did firms take to build up technological capability in Penang and Klang Valley?
Figure 8. Mean speed (in years) to move through various technological capability
Mean = 3.2, n=51 Med = 2.8, mode = 4, SD=3.4,min=-2,
max=13.3
Mean = 4.7
Med = 3, Mode = 0, SD = 4.6, min = -.5, max =
15.6, n=34
Mean = 4.5
Med = 3, Mode = 1.1, SD = 4.5, min = -2.1, max = 18,
n=36
Mean = 5.1
Med = 4.2, Mode = 4, SD = 4.5, min = -1, max = 16.4, n=28
Mean = 11.1
Med = 11.4, Mode = 1.1, SD = 6, min = 1.1, max = 19, n=14
Master basic operation to start of
intermediate innovation speed
Mean = 7.6, n=43 Med = 5.7, mode = 14,
SD=5.2, min=-.8,max=18.4
Mean = 8.9
Med = 8, Mode = 8, SD = 5.6, min = 0,
max = 19, n=25
Mean = 7.7
Med = 5.8, Mode = -.5, SD = 5.4, min = -.5, max =
17.3, n=25
Mean = 9.1
Med = 8.8, Mode = 8, SD = 4.6, min = -.3, max = 18.4, n=20
Mean = 13
Med = 12, Mode = 12, SD = 7.3, min = 4.3, max = 24, n=12
Master basic operation to start of
advanced innovation speed
Mean = 11.9, n=19
Med = 12, mode = -.8,
SD=6.5, min=-.8,max=23.2
Mean = 14.7 Med = 16.5, Mode = 7, SD =
5.9, min = 7,
max = 23.2, n=11
Mean = 13 Med = 12, Mode = 12, SD =
7.3, min =4.3, max=24, n=12
Mean = 13.7 Med = 13.7, Mode = 8.8, SD =
3.4, min = 8.8, max = 19, n=6
Mean = 17.8 Med = 17.8, SD = 1.9, min =
16.4,
max = 19.2, n=2
Master basic operation to start of
research-based innovation speed
Mean = 22.1, n=2 SD=2.6, min=20.2,max=24
N=1,
Speed = 20.2
n=1,
Speed = 23.9
Start basic innovation after starting
intermediate innovation speed
Mean = 4.5, n=44
Med = 3.6, mode = 0, SD=3.4, min=0, max=14.4
Mean = 4.4
Med = 3.7, Mode = 2, SD = 3.4,
min = .5, max = 14.4, n=22
Mean = 4.3
Med = 4.4, Mode = 6, SD =
2.3, min = 0, max = 8, n=23
Mean = 4.5
Med = 3.8, Mode = 4, SD = 2.9,
min = .8, max = 10, n=18
Mean = 6
Med=6.1, Mode = 1.17, SD =
3.4, min = 1.2, max = 9, n=4
Start basic innovation after starting
advanced innovation speed
Mean = 9, n=19 Med = 8.2, mode = 7,
SD=4.5, min=.5, max=19.2
Mean = 10.1
Med = 7.1, Mode = 5.2, SD = 5.2, min = 5.2, max = 19.2, n=9
Mean = 10
Med = 10.1, Mode = 1.3, SD = 5.1, min = 1.3, max = 15.4,
n=8
Mean = 8.9
Med = 7.8, Mode = 6.6, SD = 3.1, min = 6.6, max = 15, n=6
Start basic innovation after starting
research-based innovation speed
Mean = 19.7, n=2 SD=5.4, min=16,max=23.5
N=1,
Speed = 11.2
n=1,
Speed = 21.9
Start intermediate innovation after
starting advanced innovation speed
Mean = 4.5, n=19 Med = 4.4, mode = 0,
SD=2.7, min=0, max=10
Mean = 4.3
Med = 3.9, Mode = 2, SD = 2.4, min = 2,
max = 10, n=9
Mean = 5.4
Med = 6, Mode = 6, SD = 3.8, min =.5,
max = 13.6, n=9
Mean = 5.7
Med = 5.3, Mode = .2, SD = 3.6, min = .2, max = 11, n=6
n=1,
Speed = 4.4
Start intermediate innovation after
starting research-based innovation
speed
Mean = 16.9, n=2 SD=4.4, min=13.8,max=20
N=1
Speed = 9.2
n=1
Speed = 20.5
Start advanced innovation after
starting research-based innovation
speed
Mean = 9.1, n=2
SD=1.3, min=8.2,max=10
N=1
Speed = 5.3
n=1
Speed = 6.9
• Fifthly, an examination of the length of time at which firms remain at their maximum innovative capability level shows that, on the average, this rate decreases as firms reach higher maximum levels – see Figure 9. At the research-based innovative level, this is not surprising as only two firms have reached this level since late 1998. The number and proportion of firms that have remained at their maximum levels for different time length intervals, rather than average time length, are given in Table 6. This table shows that, at the lower innovative capability levels, there is a higher proportion of firms that have remained there longer than the proportion of firms at the higher levels. From Table 6, 10 of 35 firms (29%) that are ‘stuck’ at the basic and intermediate levels have remained there for six to 13 years. Figure 9. Average rates (in years) that firms remain ‘stuck’ at the maximum
technological capability level reached
Maximum Technological Capability Reached
Research-
based
innovation
Advanced
innovation
Intermediate
innovation
basic
innovation
Num
ber o
f yea
rs
7
6
5
4
3
2
1
0
Table 6. Number of firms that remain at different maximum technological capability
levels by length of time spent at that level Basic innovative
level
Intermediate
innovative level
Advanced
innovative level
Research-based
innovation
< 2 years 1 6 8 2
2-3 years 0 3 1 0
4-5 years 4 8 6 0
6-7 years 2 4 1 0
8-13 years 1
(12%)
3
(11%)
0
(0%)
0
(0%)
Num of Firms at
Maximum Capability
Level
8
(15%)
27
(50%)
16
(30%)
2
(4%)
Sources: Drawn from timeline data of 53 firms interviewed
Implications for policy planning • The data collected here covers a span of 40 years in the development of the Malaysian electronics industry. So
far, significant MNC-linked technological learning has occurred during this period. But it does not imply that this process will continue through subsequent phases of the industry’s development. It may do so. But, it may be that there are limits to the learning role played by MNCs, and that other types of firms and other types of learning mechanisms will have to play key roles in the future.
• The plan to tranform the Malaysian economy into an innovation-led, high-income economy should not only
focus on efforts to bring in new MNCs, but also to promote and support the innovative technological development of existing MNC subsidiaries and MNC design centres. Serious attention should also be given to foster a larger pool of indigenous innovative capabilities as in the cases of Taiwan and Korea. The same attention that has been given to attracting and sustaining foreign MNCs over the last 38 years should also be given to promoting local innovative firms. Local innovative firms should be recognised and given tangible support to facilitate their growth into global firms. Efforts to promote local innovative firms have started with the SME Innovation Award which gives a RM1 million cash prize to the most innovative SME and the introduction of 1-innoCERT innovation certification. In Korea, the equivalent of the 1-innoCERT innovation certification - INNOBIZ - provides technology funding to certified Korean SMEs, comprising a government guarantee (about 85%), a 75% refund of product development expenses (to a maximum value of USD500,000), longer loan periods and lower interest rates. Seven percent of Korean government procurement is also sourced from certified innovative companies.
• It is also important to distinguish between two fundamentally different dimensions of technological
development: movement through increasingly ‘advanced’ and complex products and processes on the one hand and, on the other, movement through increasingly creative roles in connection with those product/process technologies – e.g., from their basic operation and use through various kinds of design and engineering to differing ‘depths’ of R&D.
• Progress along these two dimensions involves the creation of very different kinds of resources and the use of
different learning mechanisms. So, while the Penang state government may have interests in accelerating both types of progress, different measures will be required in each case. A good move would be to invite established IC design apprenticeship training centres to open in Penang, i.e. a collaboration with SHRDC on their IC design tools and training facilities at MIMs and ICmic’s Academy.
---- EXPORT MARKET ---- DOMESTIC MARKET---
Global Electronics Malaysian Electronics Industry
Industry
Other
Foreign Firms
Key: The arrows represent linkages between the groups of firms
Source: derived from the research
Foreign
TNC
parents
Foreign
subsidiaries
Group 1
Local
linkage firms
Group 2
Foreign Firms Local
independent firms
Group 3
1. Inter-Firm Knowledge Flows &
Learning Links:
LINKS CENTRED ON
MARKET
TRANSACTIONS IN
GOODS AND
SERVICES
KNOWLEDGE LINKS
Existing Technology Innovation Links
(Routine Production)
CAPABILITY
- USING
LINKS
MP-Links
Marketing/
Production links, interactions between firms
is a purely marketing
relationship involving the
sale of goods and services
from the use of existing
production capabilities,
I-Link
Innovation links, interaction is the source of
innovation. Here firms
already have innovative
technological capabilities,
and they collaborate in
using those to execute
CAPABILITY
-BUILDING
LINKS
(LEARNING
LINKS)
LP-Link
Learning for
Production links are used by firms to
create or enhance basic
production capability.
and/or to master specific
managerial and
organisational practices.
LI-Link
Learning for
Innovation links,
firms build up new basic
and intermediate level
innovative capabilities.
Typology of Inter-Firm Knowledge Flows
Measure of Inter-Firm Knowledge Flows
MP-links: Links centred on market
transactions
Linkage
Rank
2
LP-links: Links centred on Knowledge
flows to learn existing technology
3
LI-links: Links centred on Knowledge
flows to learn to innovate
4
I-links: Knowledge links in
collaborations in innovation
5
2003/2005 MIGHT Innovation Audit – Linkages given highest weightage to Innovation (6 weight)
“Innovation must become a way of life, a norm. Only then will countries be able to compete against the best in the world.”
YAB Dato’ Seri Abdullah Haji Ahmad Badawi Prime Minister of Malaysia
OVERALL SCATTER PLOT FOR ALL 81 LEADING FIRMS SURVEYED
1) Awareness
2) Search
3) Building Core Competencies
4) Technology Strategy
5) Assessing & Selecting Technology
6) Acquiring Technology
7) Implementing Technology
8) Learning
9) Linking to External Sources
Source: 2003/2005 IMIGHT Innovation Capability Survey for EPU
Innovation Capability Along 9 Dimensions
• Short Courses
• Graduate Enhancement
Program
•EDA labs
• Short Courses
Software
Engineer
• Application Software
• Embedded Software
• Packaging Prototyping Centre
• Process Innovation
• Graduate Enhanmentment Program
• Testing Centre
• Short Courses
• Graduate Enhancement Program
• Prototype
•MOCCIS, MIMOS
• PCB Protototyping
Centre
•Graduate
Enhancement Program
• Short Courses
Low Speed
Multi Layered
High Speed
Malaysia Institute Of Microsystems (MIMs) – Programs
Packaging & Testing
PCB Design
Design
Analog Digital
Mixed
Signal
SOC
Semiconductor
Packaging
Testing
IC Chip
PCB Testing
RF
• Short Courses
• Graduate Enhancement
Program
• Short Courses
• Graduate Enhancement Program
•Embedded System Development
lab
MIMs
•Seminar/Symposiums
(working population)
•Schools
•Technology
awareness
•Competition
Voice of Industry
•Graduate Enhancing
Program
•Continous Professional
Education (CPE)
•Short courses
Education & Training
•EDA tools
•Prototype facilities link (e.g:
Fabs, Packaging & PCB)
•Test facilities
•Access through SMIDEC
grant
Tools & Technology
•Start up OJT
• Incubation centres
• International networking &
market access
Start up OJT Centre
•Competencies &
capabilities
•R&D directory
•Supply chain
•Government &
agencies directory
•Funding & incentives
•Technologies guide
•Benchmarking
database
•IPs Database Access
Knowledge Library
Innovation
& Creativity
Resources
Competencies &
Capabilities
Development
Information
Dissemination
Increase
Awareness
•Industry – research/academic
collaboration
•Innovation development
•Universities
•Design houses
Research & Development
SHRDC
SHRDC
SHRDC
SHRDC
Malaysia Institute Of Microsystems (MIMs) – Model
Participating companies in education and training
AIC Semiconductor Sdn. Bhd. *
Alps Electric (Malaysia) Sdn Bhd
AMD Spansion Penang *
Carsem Industries (M) Sdn Bhd *
Fairchild Semiconductor (M) Sdn Bhd *
Flextronics (M) Sdn Bhd *
Pullstreme Design Systems Sdn Bhd *
Freescale Semiconductor (M) Sdn Bhd
*
Intel Microelectronics (M) Sdn Bhd *
IRIS Technologies Sdn Bhd
Jaalaa Malaysia Sdn Bhd*
My MS*
Avago *
Transdist*
Keyasic*
Agilent*
Infineon *
Metronic Sdn Bhd
Test Tooling Solutions *
Motorola Technology Sdn Bhd
National Semiconductor Sdn Bhd *
Onsemiconductor (M) Sdn Bhd *
Pioneer Technology (M) Sdn.Bhd
Renesas (Semiconductor) Malaysia Sdn Bhd *
Sires Labs Sdn Bhd*,
Sony EMCS (M) Sdn Bhd
Spansion (M) Sdn Bhd *
Symmid Corporation Sdn Bhd *
Texas Intruments (M) Sdn Bhd *
Toshiba Electronic Malaysia
Altera*
MIMOS*
Uchi Opto*
And many more
New MIMs Program: Enhanced INSEP (~14 months)
• Industry certification is provided:
– : Analog Chip Design – Certification from Toppan Moore Japan
– : Piping System Design (Oil & Gas) – Society of Piping Engineers and Designers (SPED USA)
– : PCB Design – Certified Interconnect Designer (IPC USA)
– : Industrial Automation – Certified Automation Professional (Instrumentation Systems and Automation (ISA) USA) Pending
IRPA-PR0075 The Development and Production of Advance Semiconductor Packaging On-Site Research work conducted at AIC Semiconductor (www.aicsemicon.com) beginning Dec 2006 for 1 year.
Precondition MSL L3 Temp Cycle Condition B MSL L3 per J-STD-020B 1)%weight gain No fails at O/S test @ 25°C
192hr @ 30°C/60%RH, (-55 ~125°C) Precon per JESD22-A113 Post Soak No delam at SAT inspect
255+5/-0 C Reflow 3X, Temp cycle per JESD22 2) Post 3X reflow (transducer freq >50MHz)
-A104B, Soak Mode 1 3) 500, 1000 cyc
Precondition MSL L3 Temp Cycle Condition C MSL L3 per J-STD-020B 1)%weight gain No fails at O/S test @ 25°C
192hr @ 30°C/60%RH, (-65 ~150°C) Precon per JESD22-A113 Post Soak No delam at SAT inspect
255+5/-0 C Reflow 3X, Temp cycle per JESD22 2) Post 3X reflow (transducer freq >50MHz)
-A104B, Soak Mode 1 3) 500, 1000 cyc
Precondition MSL L3 Biased HAST/ 5v MSL L3 per J-STD-020B 1)%weight gain No fails at O/S test @ 25°C
192hr @ 30°C/60%RH, 130°C/85%RH, 33.3psia, Precon per JESD22-A113 Post Soak No delam at SAT inspect
255+5/-0 C Reflow 3X, 96 Hours Biased HAST per 2) Post 3X reflow (transducer freq >50MHz)
JESD22-A101-B 3) 96, 168 hrs
Precondition MSL L3 Biased PCT/ 5v MSL L3 per J-STD-020B 1)%weight gain No fails at O/S test @ 25°C
192hr @ 30°C/60%RH, 121°C/100%RH, 33.3psia, Precon per JESD22-A113 Post Soak No delam at SAT inspect
255+5/-0 C Reflow 3X, 96 Hours 2) Post 3X reflow (transducer freq >50MHz)
3) 96, 168 hrs
Precondition MSL L3 Biased 85°C/85%RH MSL L3 per J-STD-020B 1)%weight gain No fails at O/S test @ 25°C
192hr @ 30°C/60%RH, 1000 hours Precon per JESD22-A113 Post Soak No delam at SAT inspect
255+5/-0 C Reflow 3X, 2) Post 3X reflow (transducer freq >50MHz)
3) 500, 1000 hrs
Precondition MSL L3 HTST MSL L3 per J-STD-020B 1)%weight gain No fails at O/S test @ 25°C
192hr @ 30°C/60%RH, 150°C Precon per JESD22-A113 Post Soak No delam at SAT inspect
255+5/-0 C Reflow 3X, 1000 hours 2) Post 3X reflow (transducer freq >50MHz)
3) 500, 1000 cyc
1
3/77
2
3/77
3
3/77
4
3/77
5
3/77
6
3/77
Advanced 3-D Package Minimum Product Requirement
• Spin out from AIC Semiconductor :
– Device Semiconductor (won “Green Technology” SME Innovation Award in 2010) – used semiconductor process manufacturing technology to develop low-cost LED array to design cost-effective LED lighting
Law promotion of SME Innovation (2001): 14,626 Korean SMEs have received Innobiz certification (as of end 2008) 1. Manufacturing 2. Services/Non-Mfg 3. Agriculture 4. Construction 5. Environment 6. Biotech 7. Software 8. Design
Impact to GDP after Financial Crisis -
46% of Korea’s GDP is contributed by SMEs
Law promotion of High-Tech Start-Ups (Venture Business) (1998)
2010 SME Innovation Award 1st Batch (1st June 2010)
to Recognise, Certify & Foster Technologically Innovative SMEs
(however, 1-innoCERT is open to all companies incorporated in Malaysia)
Singapore (i-SPRING) has similar Innovation Certification
i-Class (Innovation-Class)
109 Dr Norlela Ariffin, ISTIC 2011
110
Definition of SMEs in Korea
Dr Norlela Ariffin, ISTIC 2011
Definition of SMEs in Malaysia:
99.2% of registered companies are SMEs,
78.4% of SMEs are Micro-Enterprises
Dr Norlela Ariffin, ISTIC 2011
TECHNOLOGY INNOVATION SCORING & RATING SYSTEM
TECHNOLOGY INNOVATION EVALUATION
SYSTEM:
- based on OECD (2005) OSLO Manual
V3 which accommodates service
industries & non-technological
innovation:
1. Product innovation (goods and services)
2. Process innovation (in making or supplying
goods and services)
3. Marketing innovation (first use of methods
to influence demand)
4. Organisational innovation ( in specific
domains of business)
Dr Norlela Ariffin, ISTIC 2011
Degrees of Novelty • new to the firm.
• new to the market (firm and competitors)
• new to the world (optional for surveys)
• radical or disruptive innovation (optional but impractical)
Definitions of Innovation
• An innovation is the implementation of a new or significantly improved
product (good or service), or process, a new marketing method, or a
new organisational method in business practices, workplace
organisation or external relations.
Dr Norlela Ariffin, ISTIC 2011
Innovation Activities
• All scientific, technological, organisational, financial and commercial steps which actually, or are intended to, lead to the implementation of innovations.
• Some innovation activities are themselves innovative, others are not novel activities but are necessary for the implementation of innovations.
• Innovation activities also include R&D that is not directly related to the development of a specific innovation.
Dr Norlela Ariffin, ISTIC 2011
Experience in Korea: INNOBIZ-certification
Source: Innobiz, Korea (2009)
14,626 15,063
2008 2/09
3,500
Dr Norlela Ariffin, ISTIC 2011
117
Korea’s Strategy : Recognise (Certify) & Foster Innovative SMEs into
Global Blue-Chip Companies
Technology Fund : 85-95% government guarantee, lower interest rate, longer loan period
Tax Deduction for R&D manpower salary,
utilities & equipment
Public procurement for SME Innovative products , etc.
Law promotion of SME Innovation (2001): 14,626 Korean SMEs have received Innobiz certification (as of end 2008) 1. Manufacturing 2. Services/Non-Mfg 3. Agriculture 4. Construction 5. Environment 6. Biotech 7. Software 8. Design
Impact to GDP after Financial Crisis -
46% of Korea’s GDP is contributed by SMEs
Law promotion of High-Tech Start-Ups (Venture Business) (1998)
Dr Norlela Ariffin, ISTIC 2011
1-Innovation Certification for Enterprise Rating & Transformation
www.1-innocert.my
Malaysia’s Experience Using the Innovation Scoring and Rating System
1) 2011: RM 1m Cash Prize to Most Innovative SME + RM200,000 per sector :
PENDING OPERATIONALISATION OF
‘Green Lane Policy’ : 2) Fiscal incentive: Lower Income Tax
for founders & knowledge workers 3) Preferential access to Soft Loans, Credit Guarantees,
Grants 4) Preferential access to Government
procurement 5) Innovation Coaching
Fast Track or ‘Green
Lane’ Policy
Privileges
Benchmarking Audit & Certification Fees (for 2nd Batch Applicants in September 2010)
No Item Organisation
Innobiz Korea
MIGHT 1-innoCERT
SIRIM Jab Standard
I-Class Innovation Class Singapore
2nd Batch proposal
Registration 360,000 won (RM 9K)
Online registration = FREE
RM 500 -1000 Online registration = FREE
Fees 600,000 won – 1,200.000 won (18K-36K)
Audit Fees RM 3k
ISO 9001:2008 Assessment till Audit about RM24-35K Awareness Program – RM 10 -12K Documentation – RM 15-25K Internal Audit – RM 10 – 15K
3500 The application fee for both single and integrated assessments is $2000. The application fee covers one day of site visit. The fee may vary with the number of extra site visit days. The fee chargeable for each extra day of site visit is $1,000 per day For new applicants of SQC who achieved the certification, an additional certification fee of $3,000 is chargeable after certification. This does not apply to SQC renewal applicants.
Onsite Audit Fees RM5k
Audit Fees n/a n/a 600
Request for Re- Certification
n/a n/a 100 Onsite Audit Fees RM5k
Fees for Re-Audit or Additional Audit
n/a n/a 600 RM3k within 6 month
Dr Norlela Ariffin, ISTIC 2011
INNOVATION SCORING & RATING PROCESS
Dr Norlela Ariffin, ISTIC 2011
Dr Norlela Ariffin, ISTIC 2011
126
Online Self Assessment Score Cards Overview
1 2
3 4
1 2
3 4
1
2 3 4
Total of 8 Sectors
Software Manufacturing
Biotech
Common Innovation Score Card (Total of 1,000 Marks)
E.g., Biotech Sectoral Score Card 1 of 4
E.g., Biotech Questionnaires (Total of
56 Questions)
Dr Norlela Ariffin, ISTIC 2011
127
Common Score Distribution Table for the Technology Innovation System Assessment Index
Category Details No. of
Questions Score
Evaluation Results
Remarks
Technology Innovation Ability
R&D Activity Index 2 50
Technology Innovation System 6 69
Technology Innovation Administration 2 31
Technology Accumulation System 5 94
Technology Analysis Ability 4 56
Total 19 300
Technology Commercialization Ability
Ability to develop products using technologies
5 111
Ability to manufacture using technologies 7 81
Marketing abilities 9 108
Total 21 300
Technology Innovation Management Ability
Management's ability to innovate 5 90
Ability to respond to changes in circumstances
4 75
CEO's sense of value 2 35
Total 11 200
Technology Innovation Results
Outcome of the technology competitiveness progress
3.2 Capability to supplement their technology Technology development manpower education system 15
Sub-Total 6 Items 31
4. Technology Accumulation System
4.1 Can they get research equipments easily if not easily attainable, can they fabricate themselves. 15
4.2 Quality of manpower Capability of R&D personnel based on their personal history 18
Capability of R&D personnel based on their research records 13
4.3 Actual record of technology development and commercialization
Actual record of technology development and commercialization 34
4.4 Technology retention and application system Technology retention and application system 14
Sub-Total 5 Items 94
5. Technology Analysis Capability
5.1 External environment analysis External environment analysis 14 5.2 Medium and long term strategy setup Medium to long term development strategy for technology development 14
5.3 Analysis of internal resources analyse internal resources 14
Analyse marketability of the technologies possessed 14
Sub-Total 4 Items 56 Grand Total : 9 items 300
* Conversion Formula = Mark Allotment X (Eval. Results / 5 Marks)
• Ability to conduct Technology Innovation •Ability to supplement technology
Technology Accumulation
System
• Ability to secure research equipment • Quality of Human resources • Records of Technology Development and Commercilazation • Technology accumulation & utilization System
Technology Analysis Capability
• External Environment Analysis
• Medium-long term strategy setup • Analysis of internal resources
I. TECHNOLOGY INNOVATION ABILITY R&D Activity Indices
1 1.1.1 R&D Investment Ratio (if the enterprise is younger than 2 years, use last year's record) 2 1.2.1 What is the yearly average R&D Manpower Ratio against the total employee for the last 2 years?
Technology Innovation System
3 2.1.1 Is there an organization (department) in charge of the major role of R&D in the operation? (i.e., Does the R&D department drives the technology development in the enterprise?)
4 2.1.2 What is the Level of creative environment being setup at the R&D organization 5 2.1.3 Check the items below with regards to Technical staff management system. 6 2.1.4 How many projects have been completed with the support from the Government for R&D funding for the last 3 years?
7 2.2.1 How may projects have been completed for the last 2 years in joint/contract/cooperate research or advisory work with outside research institutions or university related to commercialization of technology?
8 2.2.2 What are the forms of R&D being carried out in collaboration with external institution or university? Technology Innovation Administration
9 3.1.1 The ability to conduct technology innovation (either in-house or externally) in order to gain new businesses successfully?
10 3.2.1 How many actual training hours was conducted for the last two years, per ONE(1) R&D staff internally/externally. Technology Accumulation System
11 4.1.1 Is there a system to secure the technical equipment established, and are they in working order? 12 4.2.1 What is the career history of existing R&D staffs, in relation to the fields of R&D currently being conducted at the organization? 13 4.2.2 How many thesis have the R&D personnel published in well known overseas scientific magazines, patent filed, and products
developed for last two(2) years? Yearly average per current R&D staff. (Note : Contribution of the staff on patents hold by previous employers is not clear, and needs to clarify with INNOBIZ)
14 4.3.1 Determine the success of commercialization according to records of R&D conducted, technologies commercialized, awards received and certification granted. Judgement is made by calculating the weighted scores against the number of patents filed, awards received and etc.
15 4.4.1 Do they have a system in place that effectively Store, Control, and Utilize the technologies developed? Technology Analysis Ability
16 5.1.1 Do they have analysis system for external environment related to technology development? 17 5.2.1 What is the coverage of their medium and long term strategy for technology development in the future? 18 5.3.1 What is the type of resource analysis conducted to determine the technology development target and strategy? (how do they set
the development target and technology) 19 5.3.2 Are they currently practicing marketing activities to find customer’s needs on product development?
1st Criteria (Technology Innovation Ability)
Source: Malaysian Industry-Government Group for High Technology (MIGHT)
Conceptual View of Assessment Items
Ability to commercialize the Technology
Ability to Develop New Product Through
Technologies
•Capacity to Plan for New Product
•New Product
development Capacity
•Core Technology Supplement
Ability to manufacture using the technology
•Product Manufacturing Capability
•Quality Control
•Manufacturing Process
Innovation
•Procurement and outsourcing control
Marketing Ability
•Ability to set up and carry out marketing
strategy
•Competitiveness Analysis
•Management
commercialization of technology
2nd Criteria/Index: Commercialisation of Innovation Ability
135
II. TECHNOLOGY COMMERCIALIZATION ABILITY Ability to develop products using technologies
1 1.1.1 Does the CEO have a product development plan, and is the process of product development standardized. 2 1.1.2 To what level do they analyse on how the consumers uses their products, so that the developed products meets the
consumer’s needs. 3 1.1.3 Do they have a plan to commercialize their products, and are they executing as per the plans 4 1.2.1 What is the current level of analysis on the functions and features of the products to determine the specification of the
product. 5 1.3.1 What is the level of core technology supplement to make the product?
Ability to manufacture using technologies
6 2.1.1 Do they have a systematic operating system of production technologies to satisfy the quality requirements? 7 2.1.2 Are the production facilities maintained well, and how is the condition? 8 2.2.1 Are test equipments well maintained, and have they attempted to maintain the quality of these equipment (calibration etc.) 9 2.2.2 Are those QC activities being implemented adequate in ensuring the quality?
10 2.3.1 Is the production plan established rationally, and are the production records being maintained and utilized sufficiently for each year?
11 2.3.2 Is the Manufacturing process being implemented properly? 12 2.3.3 Do they have standard operating procedures for each workers, and are they checking the worker’s skill level?
Marketing ability 13 3.1.1 Do they have marketing strategy such as price determination, sales forecast, and analysis of the target market? 14 3.1.2 Are they able to classify the marketing channel for new businesses, the ability to determine the advantages and disadvantages of the
different marketing channels, and are they able to support the marketing channels 15 3.1.3 How do they analyse the target market? 16 3.2.1 Are they analyzing and responding to the life-cycle of new products? 17 3.2.2 Did they analyse and responded positively to the technical competitiveness of new products? 18 3.3.1 How well are they managing their internally developed intellectual properties; Did they perform patent search beforehand,
and did they file their IPs with the Patent Office? 19 3.3.2 How well do they build and utilize external network regarding commercialization of their technology. 20 3.3.3 Do they have the capability to conduct information collection for policies and regulatory standards? 21 3.4.1 What is the expertise and qualification level of the persons in charge of marketing new products, and how focus is his area of
responsibility.
2nd Criteria: Commercialisation Ability
Source: Malaysian Industry-Government Group for High Technology (MIGHT)
Ability to respond to changes
•Ability to respond to new
technology development trends
•Ability to respond to the trends of new business &
new technology by competitors
•Medium & long term new business & technology development plan
•Ability to respond to the changes of
market/policy environment
Ability to innovate Management
•CEO’s talent and level of
experiences
•Organizational Management
CEO’s Sense of Value
•CEO’s trustworthiness
•CEO’s transparency
3rd Criteria: Ability to Manage Technology Innovation
4th Criteria: Results (Outcome) of Technology Innovation
Conceptual View of Assessment Items
Result of Technology Management
• Liquidity of Funds
• Management Performance Indexes
Result of Technology
Competitiveness Improvement
•Improvement Ratio of Technology
Competitiveness locally/internationally
•Market Competitiveness Improvement
through Technology Innovation
Technical Result (forecast)
•Acquisition of IP right and influential
effect
•Forecast Technology Transfer Sale
•Effect of utilization of technology
accumulation
-Brief by MIGHT for 25th Nov 2010 on 1innoCERT
138
III. TECHNOLOGY INNOVATION MANAGEMENT ABILITY Management's ability to innovate
1 1.1.1 Does the CEO has the willingness and policies for technology innovation. On that premise, do the operational personnel share the same willingness and perception?
2 1.1.2 Assessment of the CEO in the area of risk management and the ability to carry out technology management. 3 1.1.3 Does the CEO have a career history of servicing in the same industry? 4 1.1.4 Does the CEO have a good understanding of the technology? 5 1.2.1 Does the COE have the ability to management the operation?
Ability to respond to changes in circumstances
6 2.1.1 Are they capable of responding to changes in circumstances aggressively and positively? 7 2.2.1 Does the CEO has the system to find new products and new businesses of his competitors, and how prepared is the CEO able to
counter the threat? 8 2.3.1 Are the medium to long term plans rationally and realistically established? 9 2.4.1 Are their medium to long term plans able to respond flexibly to the changes in the surrounding business environment.
CEO’s sense of values
10 3.1.1 What is the trustworthiness of the CEO internally and externally? 11 3.2.1 How transparent is the CEO in managing the operation?
IV. TECHNOLOGY INNOVATION RESULTS Outcome of the technology competitiveness progress
1 1.1.1 What is your view on the improvement of competitiveness as a result of technology innovation? 2 1.2.1 What is your view on the market’s competiveness attributed by technology innovation?
Outcome of Technology Management
3 2.1.1 What is the ability to generate sufficient funds through newly commercialized product or technologies to finance the operation 4 2.2.1 Financial results indices - Evaluate financial ratios against industrial benchmark indices
Outcome of technology achievement (estimates)
5 3.1.1 What is the competitiveness of the IP rights (acquired or pending) as a result of technology innovation? 6 3.1.2 What is the coverage of the IP rights (acquired or pending) as a result of technology innovation? 7 3.2.1 Technology (or IP) sales forecast for the next 2 years (includes deals currently under discussion) 8 3.3.1 How big will an impact on the import substitution for the next 3 years, as a result of commercializing the technology's strongest
elements of competitiveness. 9 3.3.2 What will be the impact on employment, 3 years after the technology has been commercialized? (Includes the increase of
employment with the company and jobs created externally)
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Before You Can Take the Online Self-Innovation Assessment
Dr Norlela Ariffin, ISTIC 2011
Company Profile: Important to Select the Correct Award
Category, Sector, and Business Category
Dr Norlela Ariffin, ISTIC 2011
Company
profile
Dr Norlela Ariffin, ISTIC 2011
Assessment Sectors (Sector CANNOT be changed once you have chosen
in your company profile)
General Sectors:
Manufacturing,
Non-Manufacturing and services; and
Specific Sectors:
Biotech,
Design,
Software/ICT,
Agriculture,
Environment (sustainable development, renewable energy, etc), and
Construction.
Dr Norlela Ariffin, ISTIC 2011
Dr Norlela Ariffin, ISTIC 2011
Dr Norlela Ariffin, ISTIC 2011
Dr Norlela Ariffin, ISTIC 2011
Dr Norlela Ariffin, ISTIC 2011
1.1.1 What is the R&D investment ratio against the sales for the last two years
Answer: A. 20% or more Evidence:
Audited Financial report 2009
2010 2009 2008
* 751% R&D Investment vs. sales in average for 2009 and 2008
Example of how to answer and prove evidence during Onsite Audit
Dr Norlela Ariffin, ISTIC 2011
Example of how to answer and prove evidence during Onsite Audit
Dr Norlela Ariffin, ISTIC 2011
1.2.1 What is the yearly average R&D Manpower Ratio against the total employee for last 2 years?
Answer: B. 10% ~ less than 20% (on-line answer) A. 20% or more (Actual evidence provided) Evidence:
This does not include 3 senior expatriate in-house R&D engineers from partner, FUJIPOLY (Japan)
Example of how to answer and prove evidence during Onsite Audit
Organizational Chart: Product Development Cont’d 1.2.1
VP of Product Development
Scott West
Director - Product
Development
Sundar
Principal Engineer
CL Loke
Staff Engineer
CW Chai
Engineer
Logesh Vacant Vacant
Director -Business
Development
Mike Kwon
Continue: Example of how to answer and prove evidence during Onsite Audit
Organizational Chart: Research and Development, Material Fabrication Division
R&D Manager
Soo Yit Fong
Research & Development
Sr. Engineer
Steven Chin
Technician
(Vacant)
Design
Sr. Engineer 1
Soo Sing Goh
Draftsman
Ching Chin Shun
Sub Con Development
Engineer II
(Vacant)
Cont’d 1.2.1
Continue: Example of how to answer and prove evidence during Onsite Audit
2.2.1 How many projects have been completed for the last 2 years in joint/ contract/ cooperative research or advisory worth with outside research institutions or universities related to commercialization of technologies
Answer: A. 3 Projects or more Evidence:
1. LED Array in collaboration with Bridgelux - DSEM’s LED array are High Power Light engines at less than 1/10th of the size of the conventional LED array. With this , we have reduced the Carbon footprint of manufacturing this product.
Cont’d 2.2.1
2. Solar CPV (Concentrator Photovoltaic) Receiver in collaboration with Solarmation– DSEM is the first in Asia to embark on this project. CPV’s will reduce the footprint of solar cell plants.
CELL (Solarmation to DVM)
Wire Bonding (DVM)
Encapsulation (DVM)
Cell Attach (DVM)
Substrate (DST to DVM) Diode
(DVM)
QUESTION NO 8: THE ABILITY TO CONDUCT TECHNOLOGY INNOVATION (EITHER IN-HOUSE OR EXTERNALLY) IN ORDER TO GAIN NEW BUSINESSES SUCCESSFULLY?
Innovation Project Name Year
1 Sumandak Central Processing Platform (SUPG-B), 1st Platform with 6 legged in Malaysia. 2007
2 Sumandak Central Processing Platform (SUPG-B) is integrated platform 2007
3 Sumandak Central Processing Platform (SUPG-B) having 8 risers 2007
4 Sumandak Tepi Satellite Platform (SUJT-C), 2nd Platform with monopod in Malaysia 2007
5 Sumandak Tepi Satellite Platform (SUJT-C), transportation vertical instead of horizontal 2007
6 Sumandak Tepi Satellite Platform (SUJT-C), design with no of well is 6 more than normal 2007
7 Bunga Tulip Platform (BTA), 1st Platform with monopod in Malaysia 2005
8 Bunga Tulip Platform (BTA), transportation vertical instead of horizontal 2005
9 Bunga Tulip Platform (BTA), use 2 pieces jacket platform 2005
10 Bunga Tulip Platform (BTA), design with no of well is 6 more than normal 2005
11 Kinabalu Central Processing Platform (KNPG-B) - One Integrated Platform 2009
12 Kinabalu Central Processing Platform (KNPG-B) - 1st HP/HT field development in Malaysia. 2009
13 Kinabalu Central Processing Platform (KNPG-B) - Design for TAD and Jack-Up Rig 2009
Example of how to answer and prove evidence during Onsite Audit NOTE: Open original file first
Summary of Patents Filed
Example of how to answer and prove evidence during Onsite Audit
Example of how to answer Process Flow and prove evidence during On-Site Audit at the Manufacturing facility
Eeprom Burn-In
Chamber
PC Controlled ; Operating Temperature 75°C ~
180°C ; Read-Write Cycling ; Multiple Information
Display.
Climatic Test Chamber
( 2 units, Votsch & ACS )
Climatic ; Working range : Temp = -40°C ~ 95°C
; Humidity = 10% ~ 98%RH
Temperature Cycling
Chamber ( Air to Air )
( 2 units , Votsch &
ACS)
Hirayama Hastester Temp Range : 105°C - 150°C , RH Range : 65%-
100% , Pressure = 1-3 Atm , Continuous Timer = up
to 1000hrs
Heraeus Bake Oven Temp Range = Ambient to 300°C , Programmable
Temp Profile & Timer.
Convection Reflow Furnace
Hot Chamber : +55°C ~220°C ;
Cold Chamber : -80°C ~+70°C , Fast Ramping Mode ,
Ramp Up Rate =2.55°C/sec; Ramp Down Rate =
1.53°C/sec
PC Based , 8 Temperature Control Zone , High
Capacity
Example of how to answer and prove evidence during Onsite Audit
Non-destructive Analysis
• Stereo Microscopy (Low Power)
– Crack inspection - Contamination inspection
– Package defect - Wirebond/ die attach defect
• High Power Microscopy
– Die defect inspection - Contamination inspection
• X-Ray analysis
– Mold/ Epoxy void - Wirebond defect
• Scanning Acoustic Microscopy
– Die/ Leadframe delamination - Die Crack
• Curve Trace / Micro Probing
– Electrical failure validation
• Scanning Electron Microscopy
– Die defect inspection - Package inspection
• Electron Dispersive X-Ray
– Contamination element analysis - Element confirmation
Example of how to answer and prove evidence during Onsite Audit
1.5 – 2 days Final Test/Tape & Reel
3 – 5 days Assembly Cycle Time
Quality (PPM) 10 Final Test Outgoing
50 Assembly Outgoing
99.8% Tape & Reel
99.8% & above Final Test
99.8% & above Assembly
Yield
Evidence/Explanation:
The company are implementing Statistic Process Control method
Cont’d 2.3.2
EXAMPLE: 3.2.1 How big will an impact on the import substitution for the next 3 years, as a result of commercializing the technology's strongest elements of competitiveness? Answer:
Answer: B. Able to substitute more than 20% of current import amount
Evidence/Explanation: Company’s platform requires many SMEs and new SMEs to support. 70% of outsourcing has been done locally.
-Briefing by MIGHT for 25th Nov 2010 Meeting on 1innoCERT
SME INNOVATION AWARD CATEGORIES
No SECTOR >700 POINTS
ON-SITE AUDIT
1 Manufacturing 28 23
2 Services 36 21
3 Agriculture & Biotech 16 9
4 Packaging & Design 8 6
5 Green Tech. & Energy Efficiency 8 7
6 Halal 9 5
TOTAL 105 71
Best Innovation Award in Technology
(Manufacturing Sector)
SUBSEA EXPLORE SERVICES (M) SDN BHD
Best Innovation Award in Technology (Services
Sector)
ROMSTAR SDN BHD
Best Innovation Award in Technology
(Agriculture Sector)
TT BIOTECHNOLOGIES SDN BHD
Best Innovation Award in Design &
Overall Winner
IC MICROSYSTEMS SDN BHD
Best Innovation Award in Green Technology &
Energy Efficiency
DEVICE SEMICONDUCTOR SDN
BHD
Best Innovation Award in Halal
NUTRIVENTION SDN BHD
AWARD WINNERS
Company Organization Description
IC Microsystems Sdn. Bhd. (Cyberjaya) Mixed Signal IC Design Company
Prestigious Discovery Sdn. Bhd. (Kuala Lumpur) Design & Development of Mission Critical SCADA