Micro-Mechanics builds the tools behind the ‘next generation’ of chips worldwide

[SINGAPORE] As he takes the helm of the company his father led for four decades, Micro-Mechanics chief executive officer Kyle Borch knows that the semiconductor industry has never faced a time like the present.

Shifting supply chains, shrinking chip sizes and surging artificial intelligence (AI) spending have created challenges and opportunities for the company, as it seeks to build the foundation of a “next-generation” chip industry.

Micro-Mechanics designs and manufactures high-precision parts and tools used in process-critical applications in the semiconductor and other high-technology industries.

Founded in 1983 by former CEO Christopher Borch in Singapore, the company began manufacturing components used in assembly and testing equipment, for “back-end” processes such as wire bonding and die attach.

These include, for instance, tiny rubber tips and dispensing nozzles used in the die attach process, where semiconductor chips are bonded to a circuit board.

Such “consumables” make up about 80 per cent of the mainboard-listed company’s revenue, Borch said; the remainder comprises wafer fabrication equipment parts.

The younger Borch, who took the reins as CEO in July, likens the company’s niche to “making the sewing needles for sewing machines”. Except, these needles are the foundation of a global chip market projected to reach values of US$1 trillion by 2030.

“The industry is always evolving,” he said. “Chips are always getting smaller, more powerful, more energy efficient and complex.”

Meanwhile, the rise of AI has driven more chips into everything from industrial robotics to autonomous vehicles.

“Hundreds of billions of dollars are going into advanced computing,” he noted. “AI is driving investment in the cutting-edge of chips, and it all flows down from there into the industry’s demands.”

His vision, therefore, is for the company to be a “next-generation” supplier for the critical parts and tools their customers use.

This means having to keep up with the demands of the industry to meet customer needs, he explained. “It’s no longer just about the mechanics of a part, but the performance as well.”

For instance, greater emphasis is now placed on how a consumable part operates under higher temperatures, or the cleanliness of each component.

“As chips get smaller, defects are less tolerated than before – a tiny speck of dirt can take out a chip worth thousands of dollars.”

“A worldwide presence”

Micro-Mechanics’ other main business segment is in wafer fabrication equipment (WFE), making precision metal parts that are used in “front-end” wafer manufacturing – where tiny integrated circuits are fabricated on a silicon wafer through processes such as lithography or deposition.

“You could have anywhere from 10 to thousands of chips on a wafer,” Borch told The Business Times.

“The WFE business serves several leading equipment makers, many of whom are located in the US,” he said. It is in this segment where Borch sees “tremendous opportunity”, prompting the company to launch operations in Morgan Hill, Silicon Valley, in 2008.

Since then, the company’s US operations have created its second-largest geographical market, contributing about a fifth of its revenue. In FY2025, the US segment reached a full year of profitability after a recalibration of its engineering and product strategy.

He observed that advancements in AI and high-performance computing have prompted more chipmakers to merge front-end and back-end capabilities, as advanced packaging processes develop.

“These are the processes needed to make the chips used in leading-edge technology – AI, data centres and self-driving cars,” Borch said.

“We are probably one of the few companies with a footprint in both the front-end and the back-end, with a worldwide presence.”

However, global supply-chain pressures could throw a spanner in the works for the company.

For the first quarter of FY2026, revenue from its US-based WFE segment fell 15.3 per cent from the year-ago period, despite a 20.1 per cent quarter-on-quarter increase in orders.

The company had attributed this fall to “material delays and shortages”.

“We were waiting for an insert, similar to a screw, that had been delayed in customs, holding up a few large orders,” Borch explained, adding that the issue has since been resolved.

“It’s not common – but could become more frequent as a knock-on effect of US tariffs,” he added. “However, our customers certainly understand the nature of these hang-ups, and will place the orders sooner to minimise disruption.”

Another potential challenge could appear in parts using copper, he said. Supply-chain bottlenecks have appeared globally as tariff fears send prices north and threaten supply.

Having to adapt to external challenges is not something new to the company’s leadership. Borch recalled that Micro-Mechanics’ first venture beyond Singapore came about from its effort to avoid the goods and services tax imposed in the country. The older Borch’s response was to open a plant in Malaysia.

Soon after, the company extended its manufacturing reach into the Philippines in the 1990s, and then entered the Chinese market in 2004.

Today, the company serves more than 600 customers globally, with factories in Singapore, Malaysia, the Philippines, China and the US; it has distribution presence in Europe, Thailand, Indonesia, Taiwan and Japan.

“Most of the volume in back-end packaging and assembly today is coming through Asia, especially China and South-east Asia,” Borch told BT.

Lately, Micro-Mechanics’ Suzhou-based manufacturing plant has become the largest revenue driver for the business.

In the first quarter of FY2026, the company’s revenue from China surged 19.3 per cent year on year to S$6.1 million, comprising 36.2 per cent of total revenue.

“Countries like China are realising how important semiconductors are to their own national interests and are accelerating localisation of their supply chains,” said Borch.

This domestic emphasis, he added, is a tailwind for the company’s operations in China. “Though the competition is intense, the market is big enough for us to innovate within our niche. I think there’s only more upside to grow into.”

Micro-Mechanics is now able to provide components in a number of disciplines, he pointed out. “Our customers may want a mix of different tools that work together to make their specific chip. We have to be able to do that.”

All this takes place while the company runs on a disciplined, zero-borrowing policy, which has been a core value since the company’s founding, he noted.

It may look like an inefficient use of capital to shareholders, Borch admitted, with the company also sitting on a S$27.2 million cash balance in its latest report.

He argues that this is the company’s primary strategy in the face of a highly cyclical industry, where both business segments are largely dependent on global chip demand.

“More so, I think the fact that we have a return on equity above 20 per cent, with zero borrowings, really speaks to the value that we’re providing.”