People who walk into a five-star restaurant or hotel know they will receive the highest quality products and services, and that is the standard that Micro-Mechanics, which manufactures precision tools and parts for the semiconductor industry, has set for itself, says its founder and CEO Christopher Borch.
The company has over 450 staff globally and five factories in Singapore, China, Malaysia, the Philippines and the US, with the last in Silicon Valley. Borch likens the firm’s role to producing sewing needles for sewing machines or inkjet cartridges for printers — “we supply the critical performing parts for systems,” he says.
Recently, the company has started to improve its factories under a Five-Star Factory initiative, with five key focus areas: high-performance teams; fast and effective decentralised customer support; a programme named 8S, an offshoot of Toyota’s lean manufacturing system aimed at enhancing workplace efficiency and safety; operational excellence; and innovation excellence.
With this initiative, it has better served its over 600 clients worldwide, which include both makers of semiconductor chips and equipment. Its revenue rose 9.7% from the third to fourth quarter of the 2024 financial year, partly on the back of this upgrade. Borch adds: “In the long run, it will elevate our competitiveness and support our ambitions for sustainable growth.”
The stronger footing also ensures that it can continue to benefit investors. The company has a formal dividend policy to distribute at least 40% of its after-tax annual earnings, and has consistently exceeded this target. “If you bought our shares when we went public in 2003, your return on dividends alone would be 128.9 cents per share, or a 700% return.”
A Bloomberg analysis found that total shareholder returns since the firm’s listing is over 2,800%, assuming dividends are reinvested to buy more of its shares. “I think this shows that we are a solid company that has an enduring product, is well-managed, and has a track record of understanding the importance of governance, a part of which is rewarding shareholders,” says Borch.
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A micro-tools company ready for macro changes
Micro-Mechanics is also prepared to capitalise on emerging opportunities, such as the surge in products with artificial intelligence. Borch explains: “You’re going to see more autonomous vehicles and other smart devices, and a greater proliferation of data centres. This overall trend of more data and more computing is great for us as it will create higher demand for chips.
“The challenge, of course, is that technological change is occurring at a speed faster than ever before. Companies need to stay abreast of the advances.” Even so, he is unfazed, as the firm’s close relationship with its wide variety of clients keeps its ears close to the ground.
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“Our typical customer orders from us every month, sometimes multiple times in a month… They will tell us, ‘we’re still doing this process, but now we have this additional requirement or stringency’, so we always know what is the latest development in the industry. We’re in this real-time research and development loop where we are constantly listening and responding, iterating and improving, staying ahead of the curve.”
Its factory in China has also positioned it to profit from the country’s inward turn. Borach shares: “We made the decision shortly after we listed on the Singapore Exchange to set up our plant in China. It’s been about 20 years. That was a really good move because we now have a cutting-edge facility there and a strong local team, and can grow with the market.
“What’s happening is that China wants to strengthen its internal supply chains and, if possible, have all of its supply chains completely within the nation. Our longstanding presence there as an established part of the local supply chain means that we can avoid the many problems that other external companies may have when trying to export their products into the country.”
This turn of events also underlines the advantages of Micro-Mechanics’ strategic investment in decentralisation. “By opening plants across the region and in the US, we’ve made ourselves valuable to clients. We hear their issues and needs in a timely manner in the same time zone, sometimes in the same dialect or language, and respond quickly and efficiently.”
Building a sustainable and enduring corporation
As Borch readies the firm for the future, he is proud of its journey to date. He shares: “I came to Singapore in 1981, working for an American company that was a pioneer in automatic or semi-robotic manufacturing equipment for assembly and tests. A few years later, I realised the semiconductor sector was missing some key local suppliers. That led to Micro-Mechanics.
“Back then, the global chip industry was worth about US$20 billion to US$30 billion annually. Today, its worldwide revenue is about US$600 billion every year. Its growth has been nothing short of remarkable, and we’ve become an essential player in the arena. Many of our products have become industry standards in key processes.”
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The company has also transformed from a humble operation with just a handful of employees working in a 500 sq ft plant with basic equipment, to a well-resourced corporation with five factories internationally, all fully equipped with state-of-the-art technologies. “We’ve built a wonderful, debt-free business with a high gross profit margin that is very profitable.”
Borch plans to maintain his hands-on approach and lead the firm to loftier heights. “I love working with our people, with the different cultures that we have across our factories. We’ve always said that each of our plants should be run by locals, because they know the area, it is their home, and they will do a great job. We have achieved this, with very few exceptions.”
Core values like diligence and ownership are also integral to the organisation’s success, says Borch, who tries to embody these traits in his own leadership approach: “While I can’t be involved in everything, I oversee many of the key processes. I take every chance to interact with customers and learn from analysts.” No matter where he is in the world, he sets his alarm for 5am, so that he can go through his email correspondence for an hour, exercise, and then begin the work day. “If nothing else, I’m a pretty hard worker.”
The company’s listing has also provided valuable lessons about upholding good governance, according to Borch. With over 30 recognitions for its governance efforts, Borch is confident that he has laid the foundations for a sustainable business. “When I first started Micro-Mechanics, I dreamt that it would one day become a corporation. There’s nothing wrong with being a mom-and-pop shop, but they usually don’t outlast their founders. I also didn’t want to just build something, sell it, and wash my hands off it. I want Micro-Mechanics to be a sustainable corporation that, after I retire as chief executive officer, will keep going on and doing well.”
About Micro-Mechanics
Micro-Mechanics is a leading next-generation supplier of high-precision tools and parts for process-critical applications in the wafer fabrication and assembly processes of the semiconductor industry. The group delivers an integrated suite of solutions across the value-chain, from the design and manufacturing of a range of industry-leading consumable tools and parts for the assembly and testing of semiconductors, to the contract manufacturing of precision parts and tools used in process-critical applications for the semiconductor wafer-fabrication industry. Established in 1983 in Singapore, the group was publicly listed on the SGX Mainboard (SGX:5DD) in 2003. The company’s website is: www.micro-mechanics.com
About kopi-C: The Company Brew
kopi-C is a regular column by SGX Research in collaboration with Beansprout (https://growbeansprout.com), a MAS-licensed investment advisory platform, that features C-level executives of leading companies listed on SGX. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations
