KUALA LUMPUR: CPE Technology Bhd is expanding production capacity to meet the anticipated surge in semiconductor demand this year, particularly in artificial intelligence (AI) and high-performance computing.
The company has invested in a new factory on about one acre, which features a 25,000-square-foot production floor.
CPE Technology executive director and group CEO Lee Chen Yeong said to optimise the production efficiency, the company will relocate 38 computer numerical control (CNC) machines from an existing plant to the new facility, alleviating congestion and streamlining operations.
“Additionally, we have also invested in 16 advanced CNC machines, which will be strategically placed across both the new and existing plants to enhance overall manufacturing capabilities. The new facility and machines will be fully operational by July 2025,” he told SunBiz.
According to a Bursa Malaysia filing, as of Dec 31, 2024, CPE Technology had invested RM5.61 million in capital, mainly for the purchase of 16 CNC machines. This investment aims to expand production capacity and enhance operational efficiency in response to growing demand, particularly from the semiconductor industry.
The group seeks to strengthen its manufacturing capabilities by acquiring these CNC machines and supporting long-term business growth.
Lee said a key highlight of this expansion is the establishment of an entirely new sub-assembly division, which will occupy 40% of the new plant.
“To support this division, we are also investing in advanced welding equipment, which may include electron beam welding technology, to serve our semiconductor customers better. This investment will enable us to offer high-precision, high-integrity welded components that meet the stringent requirements of semiconductor manufacturing.
“Beyond capacity expansion, we are also strengthening our supply chain partnerships and investing in workforce upskilling to ensure we remain a trusted and strategic supplier for semiconductor equipment manufacturers.
“With these initiatives, we are well-positioned to support our customers’ growth and the evolving demands of the semiconductor industry.”
CPE Technology is an engineering support services provider primarily involved in manufacturing precision-machined parts and components and providing CNC machining services.
Lee said the semiconductor segment accounts for 66% of CPE Technology’s revenue and remains a key focus.
“Despite short-term market volatility, we are implementing strategies to enhance resilience and long-term growth.
“This includes optimising production planning and maintaining flexible capacity allocation to adapt efficiently to demand fluctuations.”
For the second quarter ended Dec 31, 2024 (Q2’24), CPE Technology’s net profit increased a whopping 601.27% to RM10.47 million from RM1.49 million posted in Q2’23.
Revenue for the quarter increased 52.42% to RM33.19 million from RM21.78 million posted in Q2’23.
Moving on, Lee said CPE Technology is diversifying its semiconductor business geographically, expanding beyond key markets in the US and Japan to explore opportunities in Malaysia.
“With global supply chain shifts, including US-China chip restrictions, we see strong potential in supporting Malaysia’s semiconductor ecosystem.
“To strengthen our market position further, CPE Technology is expanding within the Integrated Gas System segment and broadening its geographical reach. While we continue serving key US and Japanese customers, we are also exploring new opportunities with semiconductor companies in Malaysia.
“This diversification reduces reliance on any single customer or region, ensuring a more stable demand flow.
“Additionally, we are optimising production planning by strategically relocating 38 CNC machines to our new facility, which will be operational in July 2025, helping to relieve congestion and improve efficiency. With the plans of integration of advanced electron beam welding capabilities, we are also enhancing our sub-assembly offerings to provide higher-value solutions,” Lee said.
In 2025, he said, CPE Technology’s semiconductor strategy will focus on enhancing engineering capabilities and automating operations.
“While we do not conduct direct R&D, we prioritise process improvements for precision, efficiency, and quality.
“Strategic partnerships with technology providers help us integrate advanced manufacturing solutions like CNC automation and high-precision welding. These efforts ensure competitiveness, scalability, and long-term growth in the evolving semiconductor industry,” he said.
Lee noted that while the primary focus remains on the semiconductor sector, the company is expanding its customer base geographically.
“Beyond our established partnerships with US and Japanese customers, we are actively exploring opportunities with semiconductor companies in Penang to strengthen our presence in Malaysia’s growing semiconductor ecosystem.
“Meanwhile, our stable business in life sciences, medical devices, and sports equipment provides a predictable revenue base that supports our long-term semiconductor investments.
“By aligning these key initiatives, we are positioning CPE Technology to navigate short-term market fluctuations while reinforcing our long-term competitiveness in the global semiconductor supply chain,” he said.
