CEO Conversation: DJ Lee, General Manager

DJ says, “Our One ZDT strategy emphasizes FPC, IC substrates, HDI (including SLP and mini LED), and multi-layer Rigid PCB. Each of these four product lines will continue to grow as we improve their capabilities."

DJ Lee, Zhen Ding Technology Holding’s (“ZDT”) General Manager, is an unfamiliar name in the capital market. He is, however, one of the “secret weapons” that Chairman Charles Shen believes can help ZDT catch up in the IC substrate industry. DJ Lee was introduced to investors for the first time during ZDT’s March earnings call. Charles called DJ “one of the people who have built the most ABF factories in Taiwan.” During the earnings calls, DJ outlined ZDT’s future plans, focusing on its IC substrate business roadmap. Investors were captivated by his well-structured presentation.

DJ comes from an engineering background. In addition to a Master’s degree in Chemical Engineering from National Central University, he holds an EMBA from National Taiwan University, as well as the a Technician of Higher Examination for Environmental Engineering license. Upon graduating, he joined Compeq’s R&D division, where he began his career in IC substrates. “During my early years at Compeq, I was responsible for the R&D of Plastic Ball Grid Array (PBGA). During those years, I traveled frequently to Japan and gained a lot of knowledge about the manufacturing process of IC substrates. When Compeq and Intel collaborated to build the Flip Chip-Ball Grid Array (FC-BGA) manufacturing plant, I transferred to Compeq’s FC-BGA factory in Dayuan as the head of the engineering section, leading over 100 engineers,” said by DJ “Several years later, when Compeq decided to close its FC-BGA business, Unimicron approached me to develop its FC-BGA business, and I decided to work for the company. Unimicron’s Ajinomoto Build-up Film (ABF) factories were built by me, and I worked my way up to the position of Vice President of Unimicron.” He further added.

Having worked in the industry for more than 20 years, DJ joined ZDT in November 2016 when he was approached by ZDT’s Chairman Charles Shen., He gained his experiences in R&D, engineering, and product development experience from Compeq; and fab construction, manufacturing and quality assurance experience from Unimicron. Like Chairman Charles Shen, DJ aims to make ZDT a global leader in IC substrates.

Standing at the forefront of everything to earn customers’ trust

Though DJ Lee has a technology background and Charles Shen has a financial background, their management philosophy is similar. Among them is “standing at the forefront of everything”. “A Japanese customer’s President once told me, ‘I really appreciate that you, as the General Manager, are always present in person and bring your team to discuss with us and respect our opinions, rather than just sending a deputy manager or a section chief to discuss.” “For ZDT to win our customers’ and suppliers’ trust, I believe this is the key. Being at the front line allows management to make quick decisions and deploy resources quickly, and I have always emphasized how important this is,” said DJ.

Second, both DJ and Charles are willing to coach their teams. “We both grew up in working-class families, so we treat our team members with kindness and honesty and build strong bonds with them. As a team leader, I am always willing walk them through the process. For instance, we encountered many challenges in setting up our mini-LED business because of the high customer standard. Despite the challenges, no one has left the mini-LED team. Under my guidance, our team members changed the way they worked and their mentality, which resulted in great improvements,” said DJ.

An execution-focused approach led to notable achievements in substrate-like PCBs (SLPs) and mini LEDs

Over the course of his career, DJ Lee has managed more than ten fabs. Along with deep knowledge of technology, R&D, and product quality, he also possesses strong execution skills. Since joining ZDT, he has led the company to deliver outstanding performance both in SLP and mini LED. “Our competitiveness in SLP and mini LED is unmatched in the world,” says DJ. “In terms of quality, reliability, yield, cost, and even packaging yield, we are among the best in the industry. Therefore, we are able to obtain a higher level of profitability than our competitors in addition to gettering a larder order allocation from customers. As a matter of fact, when I first took over ZDT’s SLP business, its yield was less than 1%.”

In order to improve SLP yield, standards. As DJ recalls, “I went to our fab at the time and evaluated the efficiency of the production lines with my team. When I asked them why the production line was so dirty, they responded by saying they thought it was very clean. I then told them my standard for ‘cleanness’. Every day after that, I went to the fab and checked that production line, and it finally reached my standard after 10 days. As soon as the standard was confirmed, I ensured that all team members understood it and requested that the same standard be applied to other production processes.”

As a matter of fact, DJ has introduced ZDT more than operating standards; he has implemented a complete framework of managing IC substrate fabs. DJ explains, “SLP and mini LED technology is simpler than ABF technology. My years of experience managing ABF fabs have been integrated into ZDT’s SLP and mini LED fabs, providing the concepts of defect density, equipment management, and most importantly, smart manufacturing. After integrating semiconductor experience into several fabs of ZDT, we found that the benefits were obvious. We achieved huge progress in the yield rate, reaching industry-leading levels. This also allows our SLP market share to climb from the seventh place at the beginning to one of the worldwide leaders now.”

Assemble advanced smart fabs that meet semiconductor industry standards

“Quality and yield are the most important factors in IC substrates, says DJ Lee. “From fab planning to line layout, clean rooms to automation, each of these is crucial. In contrast with earlier built fabs that were labor-intensive, ZDT’s new fabs in Qinhuangdao and Shenzhen are highly automated smart factories that are aligned with semiconductor fab standards.”

“Using my previous experience of building several ABF fabs, let’s assume the first factory had ten kilometers of production lines. By reducing the production lines in the second factory to six kilometers, we will significantly increase the quality and yield of products, as it reduces the amount of time products are exposed to air. That is where ZDT excels in new fab planning.”

“To reduce handling, we integrated automated equipment into our new fabs, and at the same time introduce the concept of smart fabs, which use software to increase data integration. For instance, when a production issue occurs in an inspection station, we can quickly identify which equipment caused it. This is one of TSMC’s strongest advantages. Our smart fabs use the same concepts as those used by TSMC and the semiconductor industry,” says DJ.

DJ Lee also discussed how smart fabs can further enhance the quality of IC substrates. “To me, quality is the dignity of a factory, and reliability is the key to ensuring quality. There have been reliability issues encountered by Taiwanese and Japanese industry peers in the past. In addition, we need to establish a Change Control Board (CCB). Changes to a production line’s configuration should be reviewed by the CCB. As an example, in one of the fabs I worked at previously, an engineer changed a nozzle on a certain production line without consulting CCB, resulting in defects. Due to the difficult of detecting such issue, a large quantity of defective products was produced.” Say DJ.

“We have therefore introduced Quality Management System (QMS) in serval of our new fabs to ensure that our employees in comply with our quality standards. Our QMS incorporates all the production challenges our peers have faced. I always tell my employees that you can never skip certain processes that we designed into our system, because those are lessons learned. Using the expertise of our peers, we designed all of the management details into our system, making quality control an integral part of our daily work.” He further added.

“SLP fab 2 is ZDT's first smart fab,” DJ comments. “After one quarter of mass production, this fab has achieved a high level of performance. Using this successful experience, we created a mini LED fab, which outperformed our competitors in terms of productivity and yield rate within a quarter. At present, our BT fab 1 has a yield rate that is comparable to that of our leading competitors. In BT fab 2, there will be a higher level of clean room, automation, and intelligent planning, and it should have very competitive quality and yield. Moreover, we have integrated our past experience in smart fabs with our technical capability in ABF into our first ABF fab. It is expected that we will reach desired performance after one quarter of mass production.”

The “Golden Decade”: Focus on High-end IC Substrate Technology

Among the biggest changes since DJ Lee joined ZDT is that he is leading the company’s IC substrate business to keep upgrading to higher-end technology. DJ explains, “ZDT’s initial IC substrate business started from Chip Scale Package (CSP) and focused heavily on China customers. As our IC substrate business grows, we have adjusted our strategy. Firstly, we started working closely with Taiwan Outsourced Semiconductor Assembly and Testing (OSAT) companies and IC design houses. Secondly, we have helped existing China customers migrate from general products to higher-end products.”

“I believe 2021-2030 will be the golden decade for high-end IC substrates. In terms of industry demand, under the trend of heterogeneous integration, ABF substrates will continue to move towards high-end with larger body sizes, higher layer counts, and wider applications, such as servers, intelligent vehicles, and other applications. ABF demand for high-end products will continue to grow as a result. Considering that the entry barrier to manufacturing high-end ABF is quite high, there are only a limited number of suppliers that can manufacture such products, and some older fabs have low yields. Therefore, high-end ABF substrates will remain in short supply.”

“The low-end ABF substrates (4-6 layers) is being heavily invested in by several Chinese manufacturers, and from the demand side, low-end ABF substrates are being replaced by BT substrates. Due to this, it is expected that demand-supply will balance around 2024. Thus, we need to focus on mid- to high-end products in our ABF fabs to be competitive. In a similar way, we are focusing on expanding our high-end BT footprint. Although there are concerns about the end demand for smartphones, we see no decline in customer demand for high-end BT substrates. There is still a supply-demand gap for some products, especially for those with high manufacturing complexity. Additionally, we have developed long-term relationships with our customers, and both OSATs and IC design customers consider us among the best in the industry. For these reasons, we expected our current BT fab to remain an average at 90+% utilization through 2022.”

“As for ABF, we haven’t delivered any actual results yet, but based on our proven track record in BT substrates, we have signed long-term production agreement with ABF customers. Our customers have pushed us to accelerate mass production, so I have been monitoring the progress in our Shenzhen ABF fab recently. Currently, our primary objective is to ramp up quality, yields, and capacity steadily. When demand-supply balances out for the high-end ABF substrates, we will have to win with our own strength. To stand out, quality, yields, technology, costs, and capacity are all important competitive factors. Our profitability can only be achieved if we maintain these key factors at certain levels. These fields are ours to win.” Says DJ, with confidence.

With One ZDT Strategy, ZDT Maintains No.1 Position in the World Beyond IC Substrate

“IC substrates will not be the only fast-growing segment at ZDT in the coming years. Our One ZDT strategy emphasizes Flexible Printed Circuits (FPC), IC substrates, HDI (including Substrate-Like PCBs (SLP) and mini LED), and multi-layer Rigid PCBs (RPCB). Each of these four product lines will continue to grow as we improve their capabilities. In FPC, we are already the largest manufacturer in the world, and we are committed to pursuing a stable growth strategy. Customers will continue to count on us when developing new product generations or even new product lines, especially for high-end products. In the coming years, we will also work to improve the efficiency of our FPC assets to further increase utilization rates and yields. Our FPC business has already made significant progress, and we expect it to continue to be one of our key businesses.” Says DJ.

“For HDI, we continue to expand our production capacity and are confident in becoming the No.1 SLP company in just a few years. For multi-layer RPCB, we have been undergoing an extensive transformation for the past two years. Boardtek owns a very good international customer base in automotive, networking, and server, but its efficiency needs to be improved. In addition to investing in equipment, we have brought in ZDT’s management experience into Boardtek. A few staff from the quality assurance division of ZDT in China have been transferred to Taiwan to assist Boardtek with setting up its quality assurance system. In addition, we have increased the production flexibility between China and Taiwan through ZDT’s Huai'an RPCB Park. RPCB is expected to deliver better operating results next year. Chairman Charles Shen and the management team have already outlined a comprehensive strategic roadmap to guide the company's future growth through 2035. It is my firm belief that ZDT can maintain its position as the world's No. 1 PCB manufacturer in the future with all four product lines.” Says DJ, with a confident smile.

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CEO Conversation: DJ Lee, General Manager

DJ says, “Our One ZDT strategy emphasizes FPC, IC substrates, HDI (including SLP and mini LED), and multi-layer Rigid PCB. Each of these four product lines will continue to grow as we improve their capabilities."

Standing at the forefront of everything to earn customers’ trust

An execution-focused approach led to notable achievements in substrate-like PCBs (SLPs) and mini LEDs

Assemble advanced smart fabs that meet semiconductor industry standards

The “Golden Decade”: Focus on High-end IC Substrate Technology

With One ZDT Strategy, ZDT Maintains No.1 Position in the World Beyond IC Substrate

CEO Conversations XXXIV: Charles Shen, Chairman of Zhen Ding Technology Holding Limited (4958 TT)

Zhen Ding's Results in the Fourth Quarter of 2023 Reached the Peak of the Year, and the Company is Expected to Grow Moderately in 2024

MSCI Upgrades Zhen Ding’s ESG Rating from B to BB

Zhen Ding Announced Its Operating Results for the 3Q23

October 2023 Monthly Revenue Report

Economic Daily News: Zhen Ding continues to be the global PCB leading manufacturer

CEO Conversation: ZDT Chairman Charles Shen