From computer Business Review, a sister publication.
Think of the Asian semiconductor industry, and the names which come up are Fujitsu and Hitachi of Japan, Hyundai and Samsung of Korea, and Acer of Taiwan. Thailand, a beautiful country, but a tourist destination of questionable repute, doesn’t normally figure. Charn Uswachoke, a high profile businessman who became known as ‘Mr Chips’ in Thailand, wanted to change all that. Uswachoke built up the Alphatec conglomerate in Thailand after buying the Signetics chip manufacturing arm of Philips of Holland back in the 1980s. The Alphatec group is behind one of the world’s biggest start-ups, Submicron Technology, a chip fabricator intended to build state-of-the-art 64 Mbit memory chips and other devices. Work on the project began in 1994, and for a long time, as Uswachoke raised vast sums of money, created subsidiaries and signed up high profile US electronics companies as partners, it looked like he was going to play a significant role in turning Thailand into a Tiger economy boasting the same high technology infrastructure as Taiwan and Korea. Uswachoke recently claimed that he owned 10% of the world’s semiconductor market. But in the last few months, it has gone horribly, horribly wrong. Alphatec Electronics, a Bangkok- listed subsidiary of the Alphatec Group, was reported by the Stock Exchange of Thailand to have faked its profits for a period of at least three years. Some $156m is believed to be unaccounted for, and fictitious transactions are said to have concealed the fact that its debt has grown to $450m. Just before Uswachoke resigned in August, a stock exchange investigation began and a recently appointed chief financial officer resigned, alleging that key documents relating to the case were being put into the shredder machine. Certainly, Alphatec has some embarrassing documents. It is now in technical default of $45m worth of European debenture finance. The cash shortage has thrown the massive Submicron project into chaos. A rights issue on the Stock Exchange of Thailand (SET) was canceled last year, and Texas Instruments, its US partner, has now pulled out. Dozens of key employees, many from the US, have not been paid for months. And Submicron is said to owe $180m to US and European equipment suppliers, and still needs some $400 to 500m to complete its Alphatec, understandably, is not getting much sympathy from US suppliers, partners or creditors right now. In their latest financial quarters, Applied Materials Inc and Texas Instruments were forced to take special charges of $16m and $44m respectively. Other write-offs are likely to follow. Harry Van Wickle, Alphatec’s former US president, told the Wall Street Journal last month, Alphatec and Thailand’s names are mud in Silicon Valley now.
Even the optimists in the Thai government, which has done everything it can to support the venture, now fear the worst. When work on the plant began, Alphatec ordered state of the art 0.5 and 0.6 micron fabrication equipment. Now rivals in Korea and elsewhere are building plants to manufacture at 0.35 microns, enabling them to build faster, smaller chips.
A number of investigations are now underway to find out what has gone wrong at the company and what can be done. But many think that Uswachoke’s main crime is that he overstepped himself, both financially and technically, and that it was all made worse by Thailand’s economic problems and the devaluation of the Baht.