To combat this, the Chinese government is helping companies sell their products by providing subsidies. Chinese manufacturers also have a knack for breaking into new markets — patents offer little protection since they can be sidestepped easily.
However, there could be an unexpected beneficiary in the trade war — UMS.
According to CEO Andy Luong, who is also UMS’s controlling shareholder, tariffs will benefit the company as customers find it more expensive to buy chips manufactured in countries like China or Cambodia compared to those manufactured in Singapore via UMS.
Quality over quantity
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Luong says “everything is good about Singapore”, where UMS’s headquarters is located, except that it is an expensive place to do business.
“But being expensive doesn’t mean it’s bad. We can make use of the higher-value environment to produce high-value products,” adds Luong, likening it to high-end luxury brands that sell quality products.
“We want to present ourselves as a more premium supplier.”
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Luong’s vision isn’t far off the mark, given that the city-state is being recognised by a rising number of companies such as Airbus and Rolls-Royce, who have opted to base certain manufacturing processes here. As such, UMS has proposed that its customers move the parts that are currently made in Europe or America to Singapore, where its facilities can provide ample support.
However, for UMS to remain profitable and maintain its margins, Luong recognises the need to streamline the company’s processes and outsource certain parts of the production line to other countries. In February 2009, the company’s hub in Penang began operations. In July 2024, it announced an expansion with the purchase of more land in Penang Science Park North.
In Singapore, UMS will conduct its new product launches and research and development, while its Malaysian hub complements it with its manufacturing facilities.
UMS’s major expenses are in Singapore dollars (SGD) or Malaysian ringgit. “We keep enough local currency to pay for overheads, although the bulk of our money is in USD,” says Luong.
At present, the strong SGD is helping UMS, given that all its purchases, such as its original equipment manufacturer (OEM) parts, raw materials and certain expenses such as salaries and overheads, are paid in USD, says Luong.
Even for machinery and equipment, the company buys them in Japanese yen or euros due to better rates. For example, UMS’s major customer is Nasdaq-listed, California-headquartered Applied Materials.
Bet that paid off
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To an extent, Luong comes across as a betting man whose calls have mostly paid off. Born in Vietnam, he migrated to the US in 1979, lived his version of the American Dream, but decided to make a big bet on Singapore in 1996. He moved his machining company, then named “Long’s Manufacturing”, from Silicon Valley to Singapore after being approached by the Economic Development Board (EDB).
Initially, he questioned whether the move to Singapore was a “very dumb” decision. After all, he had no customers or a presence here. However, labour costs and “terrible” work ethics in the US pushed him to accept Singapore’s tax incentives of 10 years and government land offers.
UMS was born after Luong entered into a joint venture with URACO Holdings in 1996. The company was acquired by Luong in 2000 and was subsequently renamed UMS Semiconductor.
To this day, the group continues to be headquartered out of its original 22 Changi North Crescent address.
In the early days, the company machined and completed their products before shipping them to the US. “We did that for around three to four years,” says Luong, who initially adopted work for UMS from his existing US facility by taking orders and sending the material to Singapore by container for processing.
This led a key customer of UMS to take notice of its stable operations in Singapore. He recalls: “In the 2000s, they, let’s call them customer A, set up their office in Singapore and we took them on. So, we were actually an example of how moving from the US to Singapore could be successful.”
Luong’s second bet in 2007 was to set up UMS’s Penang facility. Today, he says UMS has about 400 employees in Singapore and around 1,000 in Malaysia. He says, “We use the best of both countries. That’s why in the last 10 to 15 years, we have been profitable, because we streamlined our process and integrated our operations vertically. We also don’t have to spend a lot of time sourcing [for business] in Malaysia.”
In its most recent 2QFY2025 ended June results, sales from UMS’s Malaysia operations surged 270% y-o-y, contributing to the 20% y-o-y group revenue increase to $67.3 million. In tandem, earnings grew 10% y-o-y to $10.3 million. With a second interim dividend of one cent per share, the total dividend payout for the half-year came up to two cents.
According to UMS, the revenue growth in Malaysia was due to a stronger order flow from the group’s new major customer, which Luong dubs customer “B”.
Luong says, “We spent two years qualifying the parts they needed. Finally, we are starting to ship products and then we will work on a roadmap to qualify more parts. This can take as long as a year to qualify, especially if the part is critical.”
Luong’s third bet is increasing capacity — this cost him $120 million. Done two years ago, the sum went towards building new factories, buying new machinery and upgrading existing facilities. He says, “It’s not a small amount of money, but if I don’t invest, how could I get a job from the customer? If you look back, it’s because I invested in a customer who saw the potential in UMS and had the confidence to move jobs from America [to Singapore].”
In Malaysia, UMS bought a 235,000 sq ft plot next to its Penang facility for RM15.2 million ($4.63 million) to ramp up capacity.
A separate factory in the country was also purchased for $8 million, should even more capacity be required. “It has no jobs, no operators. We’re building up the automation line there, so it’s not in operation yet,” says Luong.
He adds, “It’s just a sales pitch. You want to tell potential customers that you have ready capacity, so when business finally arrives, we will be the first to receive without worries about the delay of a customer’s expectation.”
Glass half-empty
In many ways, Luong’s passion for business has not faded. Asked if the glass is half-empty or half-full, he says: “The empty half is better. Why? You can always top it up, look for more nourishment. If you say it’s half-full, then you’re saying it’s gao dim (Cantonese for ‘task completed’) already, you don’t want to work anymore.”
Luong’s optimism has been reflected in UMS’s success over the years. The group’s share price, since opening at 15.6 cents in May 2001, recently peaked at an all-time high of $1.57 on Aug 8. As at Aug 22, it was trading at $1.35 or 28.57% up for the year. UMS, which debuted on the Bursa on Aug 1, closed at RM2.00 (61 cents) on Aug 22.
UMS is among the handful of mid-caps that have caught the attention of the investment community for its growth prospects, with further positive sentiment following the recent measures by the government to boost the local market. “I think with the MAS coming in, it’s giving confidence to the market that business is good, the growth is there and the government is committed to it,” says Luong.
The view is shared by DBS Group Research’s Ling Lee Keng, who raised her target price on the stock to $1.84 from $1.34 previously, with a “buy” call on UMS benefitting from the EQDP, among other reasons.
“With its main facilities located in Malaysia, UMS stands to benefit from the ongoing shift in global supply chains amid China-US trade tensions. The group is well-positioned to capture new growth opportunities as more companies diversify operations out of China and the US,” she says in her July 24 report.
“UMS expects to benefit from the AI-driven global chip sector rebound and rising shift of global semiconductor supply chain,” states UOB Kay Hian’s John Cheong in his Aug 14 note, where he kept his “buy” call and $1.73 target price, which was raised to this level from $1.36 on July 16.
William Tng of CGS International is similarly upbeat. In his Aug 21 note, he resumed coverage on this stock with an “add” call, from “hold”, and raised his target price to $1.87 from $1.06. “The successful secondary listing on Bursa should widen its potential pool of investors and help support improved valuations, in our view,” says Tng.
Succession plans
At 65, Luong is now looking for a successor who is “much younger”, preferably in their 40s. The candidate must also be found within the next three years.
“We have been looking for someone either within our shareholders or for someone from the outside — we haven’t decided yet. The best case would be a family member; this way, the wealth would pass on to them,” says Luong.
He adds: “For someone from the outside ... The only risk is that they have nothing to lose. If they screw it up, it’s not their problem. But if it’s a shareholder of the company, that will be more secure in a way. You know, in our industry, it really doesn’t matter.”
Until the time comes, the CEO looks set on helming UMS the only way he knows how: through hard work and luck.
“The harder you work, the luckier you are. Luck will be about 30% of your success, but for crying out loud, you must work for the rest of it,” sums up Luong.
