Singapore wants a piece of the pie from semiconductor investment

• Singapore wants to win its “fair share” of semiconductor assembly and integrated circuit design investments.
• The city-state will be focusing on the semiconductor value chain of activities, and because it is a small country, its share of the pie would also be relatively small.
• Singapore currently accounts for about 5% of the global wafer fabs output.

Singapore is known to be a prominent financial and technology hub in the region. Still, when it comes to the semiconductor supply chain, the city-state has been dwarfed by its regional peers. However, since chip nationalism has gained momentum due to the pandemic, Singapore has been attempting to shore up its electronics sector. The target is to grow its manufacturing industry by 50% by the end of this decade, with the semiconductor segment making up the larger share.

That was the target set by the Singaporean government in 2021. Fast forward to the present, Singapore’s Economic Development Board’s chairman, Beh Swan Gin, in an interview with Bloomberg Television, said that the city-state would be looking to win its “fair share” of investments in semiconductor assembly and integrated circuit design. “We will have to take it as it is, and we will do our best to secure our fair share,” he said.

Beh noted that Singapore currently accounts for about only 5% of the global wafer fabs output. “We are a small country, so in a way, the share of the pie that we need to ensure to continue to develop our economy is relatively small,” Beh added. He also noted that the city-state would be focusing on the semiconductor value chain of activities since more countries, especially the US via its so-called CHIPS Act, are wooing investments back.

He reckons the move by President Joe Biden’s administration is a “muscular industrial policy to bring back manufacturing and technology development to the US.” “It has made competition for investments more intensive and certainly for the type of investments today Singapore is also aiming for,” Beh highlighted.

How is the semiconductor sector in Singapore doing?

According to the Minister for Trade and Industry of Singapore, Gan Kim Yong, the semiconductor sector, as of 2021, was the largest manufacturing segment of the city-state, contributing 7% of its GDP for the year. “Notwithstanding the 4.1% year-on-year decline in semiconductor manufacturing output in July 2022, the sector has grown at a Compound Annual Growth Rate (CAGR) of 10.6% over the past ten years,” Gan noted.

Gan expects global competition for semiconductor investments to intensify for economic and strategic reasons. The CHIPS and Science Act is an example of other countries introducing measures to attract semiconductor investments. “We must maintain our competitive position in the face of such challenges. But we cannot compete based on financial incentives alone,” he said.

He noted that the city-state’s strong fundamentals, including its stability, robust intellectual property protection regime, and skilled workforce, have allowed them to develop and grow the semiconductor sector over the decades. “To support the growth in the sector, the government has continued to partner with key companies across the value chain, many of whom are global leaders in the sector, to invest in leading-edge manufacturing capacities and workforce training in Singapore,” he iterated.

The semiconductor investments announced in Singapore since the pandemic include US semiconductor maker GlobalFoundries’ plans to invest over US$4 billion to expand its wafer plan as it attempts to tackle a global microchip shortage. GlobalFoundries’ announcement in 2021 came after German chipmaker Infineon Technologies picked Singapore as its base for developing artificial intelligence applications, with an investment commitment of US$20.2 million.

“Recent investments by Globalfoundries, UMC, Siltronics, and Pall Corporation are a testament to the strong partnership we have built with the industry leaders. We also work with partner manufacturers to conduct complementary activities in Singapore, including in R&D and supply chain management, to diversify their base of activities and deepen their operations here,” Gan concluded.

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