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Returning Singapore to the global stage of semiconductor production
IN 1986, Singapore became the second nation in the world to enter the semiconductor foundry industry. This early start was instrumental in establishing Singapore as a key semiconductor hub, generating over a dozen semiconductor fabricators each with US$1 billion or more in investment, and putting the island nation firmly on the global technology map. During this time, China, a global semiconductor power player today, did not have a single semiconductor commercial foundry facility.
The early move provided the catalyst for a rapidly emerging semiconductor ecosystem in Singapore, attracting global equipment makers, material developers, chemical manufacturers, and a range of support industries. Top civil leaders like Philip Yeo, alongside investment agencies such as Temasek and EDBI, are owed a debt of gratitude for their work in bringing this to fruition.
Now, 33 years later, Singapore's global credentials are in jeopardy. The nation is still a respected regional semiconductor hub, but falls behind world leaders such as the US, Taiwan, South Korea, Germany and China. So how can stakeholders energise growth to launch Singapore back to the global stage?
Semiconductors, the engine and brains of future technologies and innovation
Semiconductors are the fundamental building blocks for innovative technologies set to transform the way that we live, learn, work and play. The next generation semiconductor chips and technologies provide the springboard for transformation across society and industry.
Future health care
Growing demand for personalised health care is driving innovation. Wearable devices, cloud-based monitoring solutions and remote, non-invasive treatments support increasingly informed health decisions. Semiconductor innovation and bandgap materials are driving miniaturisation of chips and super-sensitive sensors with superior performance, power consumption, quality and accuracy.
Industry 4.0 and smart cities
We are entering the era of the Fourth Industrial Revolution. Industry 4.0 is going to revolutionise the way that we work and live. Semiconductor chips will be vital to a smart, connected future. Smart Nation Singapore is already providing a pathway to ensure Singapore is at the forefront of this particular transformation.
The adoption of renewable energy is crucial to averting the worst of climate change. Total installed renewable capacity globally doubled in the decade to 2017, with Asean's renewable capacity targeted to double by 2025. Innovation in semiconductor technology is enabling this transformation, from increasingly efficient solar panels to smart grid technology supporting adoption.
Superior semiconductor materials will be vital to limiting the environmental impact of our connected world, with projections that Internet of Things (IOT) and connected devices could account for up to 14 per cent of global emissions by 2040. Opportunities in silicon photonics technologies are already improving efficiency and lowering costs for operators, and continued semiconductor innovation will be vital to leveraging the greatest data-driven opportunity from Industry 4.0.
South-east Asia is a largely underdeveloped market for electric or automated vehicles, yet with the right support, Singapore could become a global hub for driverless and automated technologies. Emerging semiconductor materials like gallium nitride (GaN) and silicon carbide will be key in developing these technologies, enabling efficient electric vehicles with complex sensors to ensure seamless and safe operation. Industry analysis predicts that the automotive semiconductor market alone will achieve 9.5 per cent compound annual growth rate for 2018-2022.
Choosing the right path for Singapore
Semiconductor technology is entering an exciting period. That means Singapore is at a crossroads. It has a history that it should be proud of, but a future that it must decide upon. So, what are the health indicators today?
- Singapore is home to more than a dozen semiconductor fabs, and is one of just six Asian nations with proven fab infrastructure and capabilities.
- It boasts great research and development thanks to academic institutions and research institutes, exploring exciting niche technologies.
- It has a positive business climate, with strong intellectual property protections, high productivity and an enviable global reputation.
- Singapore has a rich culture of multinational corporations (MNCs), with substantial potential to expand its semiconductor capabilities to enable partners.
- It is well positioned to provide a valuable semiconductor offering in a competitive landscape between China and US/Europe, where intellectual property and technology is a noted issue.
- Singapore's smart city ambitions are driven by smart top-level policies, representing bold steps towards a connected future.
Of course, every nation has its gaps, but Singapore's "red dot" status makes them more pressing to address.
Singapore is one of the most expensive high-tech manufacturing locations globally, unlike Taiwan, South Korea and China. These nations have focused on semiconductors as a key economic pillar for over 40 years and are reaping the benefits. They continue to enable a competitive semiconductor environment. Elsewhere, in New York, the Empire State Development Board supports 13 centres of excellence to foster collaboration in high-technology. In Europe, the ECSEL programme offers a multi-billion euro public-private initiative to support development of electronic components and systems.
Samsung is a major global player technology but would likely have gone bust twice over if not for national support. Similar stories emerge in China. Europe operates on a largely integrated regional level, leveraging the continent's strengths and diversity, with research and development (R&D) supported by the European Union. Singapore must learn to operate within a similar context in South-east Asia.
Singapore lacks the home-grown semiconductor ownership that other Asian countries boast of. None of the nation's fabs are currently owned by a Singaporean entity. While this shows an encouraging global view of Singapore's capabilities, it cannot replace local success stories. Compare this to China, where entire semiconductor entities are either owned by the state or receive substantial support.
This is a key enabler for technological innovation. The US has the venture giants of Silicon Valley, and the success of the nation's tech companies is evident. Singapore's private equity landscape is comparatively non-existent. The UK enjoys targeted government semiconductor funds and policies to nurture growth, as well as leveraging collaboration to attract business.
Singapore enjoys a progressive policy framework but should not be afraid to assess and validate implementation of these policies. Adapting policies to fit locally-competitive versus globally-competitive industries is one consideration, recognising the different challenges that exist within these widely different markets.
It is critical to enable a level playing field for industries that compete globally. Electricity costs, manpower levy, building rental costs are examples where Singapore's semiconductor players face substantial challenges compared to global competition.
A veteran's view
As a semiconductor veteran who has lived through this cyclical industry, with first-hand experience of both multi-billion dollar corporate life and lean startup culture, I would urge government agencies, national investment groups, academic and research institutions, and even parents and students, to explore the semiconductor and engineering space with a fresh eye on its opportunities.
The nation must work together to best utilise the S$19 billion as part of the nation's five-year Research, Innovation and Enterprise 2020 plan announced in the 2019 Singapore Budget, and optimise our existing talent and capabilities to generate greater commercial success. We need to invest and support emerging niche technologies and segments where we can carve a place as global champions. This will require vision, intuition, courage and the understanding to make the right decisions.
It is essential that we improve our skills in commercialisation and execution. This is where policies and mind-sets are most in need of change. It is important to better identify who, and how, to support small and medium enterprises (SMEs), and nurture those with potential. SMEs can be a significant catalyst for commercial success, yet Singapore's semiconductor industry has only a small pool of such companies. A strong national framework to support startups, as well as existing players, can provide a level playing field to compete with rival companies and countries that already enjoy extensive state support.
Singapore has exciting policies, but implementation should be assessed. The funds to support technological innovation are either too limited, or too time-consuming, as they currently stand. A focus on multinational companies and exciting foreign startups should also be widened to support more homegrown organisations, especially for MNCs and SMEs that have committed to establishing key high-value operations and developments in the island. That local connection adds another incentive for companies to call Singapore their home, rather than just an optimal market in which to be based.
The current regional absence of full-blown product companies or leading design experts and semiconductor entrepreneurs is another major challenge. We need to bridge that gap by providing a positive environment that attracts and encourages such exciting global talent.
Adding those key capabilities to our ecosystem will further empower it to grow. Supporting graduate talent and post-graduate talent represents another resource challenge which we must address.
This is a time of soul-searching in Singapore. As semiconductors are set to transform our world, we must understand how to transform our semiconductor industry to once again take a leading global role. With the right support, Singapore's respected semiconductor industry could well be the spark for even greater economic success.
- The writer is founder and group chief executive officer, Innovative Global Solutions and Services (IGSS) Ventures, a technology investment holding company