France's Soitec bets 275m euros on Singapore to tap consumer tech surge

Singapore

IT'S a good time to be in the semiconductor business these days.

Global chip shortage notwithstanding, the growing demand for technologies like electric vehicles, smart devices and the Internet of Things directly translates into roaring business for semiconductor firms.

With all this in mind, French chipmaker Soitec is looking to ramp up supply with the target of tripling its revenue to US$2 billion by 2026.

Singapore, which hosts its largest factory outside France, will play a key role producing its flagship 300mm silicon-on-insulator (SOI) substrates.

The company, a leader in the SOI market, is investing 275 million euros (S$440 million) over five years to beef up its Pasir Ris factory, which is on track for a fivefold increase in production capacity.

This will allow the facility to produce up to 1 million SOI wafers per year, topping even its headquarters facility in Bernin, France, by over 40 per cent.

The funds are part of a global investment of 1.1 billion euros that the company has planned to help it achieve its revenue target, according to its five-year plan.

Its Singapore investment will go towards procuring more equipment, beefing up infrastructure and hiring some 100 people this year across all levels, Paul Boudre, the company's chief executive, told The Business Times in an exclusive interview.

Describing the strong opportunities in Singapore, he is expecting all the growth from its 300mm substrates over the next two years to come from Singapore, given that its facility in south-eastern France is "totally full".

This comes down to several factors that he described as "critical and important".

He credited the supportive government, which has been "very helpful in every stage", including the setting up and hiring. This went some way to diminish risks for the company, which arrived in 2008.

Another key factor is having ready access to a pipeline of highly educated and capable people who are continuously looking to improve the performance of Soitec's products.

The third factor is flexibility. He said: "We need some flexibility in this industry - we need sometimes to slow down and sometimes to accelerate, and we have seen over this pandemic that Singapore has been extremely efficient in the way they were dealing with the pandemic."

Singapore's geographical location and ease of connectivity also makes it an "open door to Asia", which is why Soitec's head of sales is based in Singapore even though the company has offices in South Korea, Taiwan, China and Japan, Mr Boudre said.

But has the Covid-19 pandemic changed all that? After all, international borders are now largely closed and restrictions on travel are extremely onerous.

"Overall, it is more difficult for everybody. It's not more difficult to be in Singapore than to be everywhere else. It's the same," he said, adding that travel restrictions apply not just in Singapore but in Taiwan, China and the rest of the region.

"We are managing our business around this complexity, like everybody else and like every country. But the fact that our people here in Singapore feel extremely comfortable in terms of safety and all else, I think it's a benefit," said Mr Boudre, who is based in Singapore.

In fact, the highly-automated nature of the semiconductor industry has helped to increase its resilience against the current crisis, said Mr Boudre, adding that none of Soitec's factories stopped work during the pandemic.

As a result, the company has not stopped shipping to its customers over the past year, which Mr Boudre believes has helped its customers and suppliers to see Soitec as "a reliable partner" that can be counted on.

This could be especially crucial at a time when semiconductors are in severe shortage globally, owing to a confluence of factors related to supply chain disruptions caused by the pandemic.

He believes the problem was exacerbated when car makers began closing their factories and releasing most of their capacity in semiconductors last May when sales took a dive just as the pandemic was worsening.

The microchips were then absorbed by other growth industries, he said, noting that many key innovations rely on semiconductors to bring them to life.

"Nine months later, they realise that people, in a very amazing way, were thinking about freedom and buying a car again. But the car is not exactly the same car," he said.

"Because now, we want to have new innovations in the car - electric cars, more electronics inside, more capabilities in there based on electronics and semiconductors."

This has created an even tighter squeeze, since car makers are now demanding chips "at a level that we never reached in terms of volumes", he said.

The global chip shortage could take another year to stabilise, he estimated, noting that there is just not enough to go around at this time, even though businesses are trying to catch up.

As for Soitec's next step, Mr Boudre said the company is committed to executing its five-year plan while also focusing on research and development.

The company is now developing several partnerships here, such as with the Nanyang Technological University and the Agency for Science, Technology and Research, which it hopes to connect with its existing programmes in France and Europe.

He said: "We want to make sure that we can benefit also from the environment in Singapore - to be more aggressive in some new innovations that are coming and that will probably come earlier in Singapore than in France."

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