Singapore to benefit from rise in long-term demand for chips: DPM Heng

Singapore

DESPITE official forecasters' expectations of a full-year manufacturing decline here, Deputy Prime Minister Heng Swee Keat affirmed on Wednesday that the ailing semiconductor industry - which makes up about 7 per cent of the economy - will stay key to the Singapore factory landscape.

"More broadly, the global demand for semiconductors in the longer term remains strong," he added, citing consumer electronics growth and development of new technologies, which are expected to drive the industry.

And Mr Heng called Singapore "well positioned to meet the rise in long-term global demand" when chipmakers recover from this year's weakness.

"We must continue to invest for the longer term and strengthen our ecosystem," he said, as he opened a facility in Woodlands. "This way, we will be ready to harness new opportunities when the global demand picks up."

The remarks from Mr Heng, who is also Finance Minister, came even as the global semiconductor downturn and trade tensions involving key markets prompted another full-year growth downgrade on Tuesday.

The manufacturing sector shrank by 3.1 per cent year on year in the second quarter, on contractions in precision engineering and electronics.

But Mr Heng said the semiconductor slump came in the wake of a "super cycle" and pointed to industry hope for a return to growth next year.

"Our semiconductor industry has seen through many business cycles," he asserted. "Each time, our companies weathered the downturn, took the opportunity to transform, and emerged stronger."

Singapore's more than 60 semiconductor companies together make up 11 per cent of global market share, according to estimates from the Economic Development Board (EDB).

Mr Heng also called for collaboration in the industry ecosystem, "to remain relevant as a semiconductor hub" amid stiff global competition, as manufacturers such as Micron could work with small and medium-sized suppliers, as well as researchers. Such improvements, he added, are "part of the wider transformation of our electronics sector", and build on initiatives such as the industry transformation map unveiled in 2017.

Mr Heng later toured the new facility by American semiconductor giant Micron Technology, which broke ground in April last year and is an expansion of cleanroom space for 3D NAND flash memory products that are largely made in Singapore.

EDB chairman Beh Swan Gin said in a statement that the latest investment - which was reportedly a "multibillion-dollar" commitment - "demonstrates confidence in Singapore and in the long-term prospects of the semiconductor industry".