About two years ago, in an article titled "Unveiling Singapore's Semiconductor Industry," I outlined the development and evolution of Singapore's semiconductor industry—from its rapid rise to strategic retreat, and then back to the battlefield, Singapore's semiconductor industry has played a story of "planting the parasol tree to attract the phoenix."
In the past two years, the semiconductor industry has experienced cyclical fluctuations, capacity competition, and industrial chain changes, with the global market undergoing dramatic changes.
Now, Singapore, known for its finance and trade, the former global semiconductor industry stronghold, is facing new opportunities in a complex situation.
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The Singaporean government has set a goal to bring a 50% increase to the manufacturing industry, mainly the semiconductor industry, by 2030. Many large chip manufacturers are also taking action, increasing investment and capacity in Singapore.
Chip giants bet on Singapore
NXP joins forces with World Advanced to enter Singapore
Recently, World Advanced and NXP Semiconductors announced that they will jointly establish a joint venture named VSMC in Singapore and build a 12-inch (300mm) semiconductor wafer manufacturing factory, with a total investment of $7.8 billion.
It is reported that after obtaining approval from relevant regulatory authorities, the joint venture will officially start the construction of the wafer factory in the second half of 2024, plan to achieve mass production in 2027 and start supplying the first batch of chip products to customers, and is expected to reach a production capacity of 55,000 12-inch wafers per month by 2029.
The new wafer factory will mainly use relatively mature 130nm to 40nm process technologies to produce mixed signal, power management, and analog chip products, with target customers mainly facing the automotive, industrial, consumer electronics, and mobile terminal markets. In addition, after the first wafer factory successfully achieves mass production, World Advanced and NXP will also consider continuing to build a second wafer factory.
World Advanced Chairman Fang Lue said that the choice to build a factory in Singapore is based on multiple considerations. On one hand, we have already acquired GlobalFoundries' 8-inch wafer factory in Singapore and have operational experience and close cooperation with the local government. On the other hand, Singapore provides a comprehensive infrastructure and complete policy regulations for the semiconductor industry.Siltronic's Third Wafer Fab in Singapore Completed
On June 12th, German wafer manufacturer Siltronic officially inaugurated its semiconductor wafer factory in Singapore, which cost 2 billion euros to build.
This is Siltronic's third and largest wafer production facility in Singapore, covering an area of 150,000 square meters. The factory mainly produces 12-inch semiconductor wafers, and it is expected to reach a monthly output of 100,000 wafers by the end of the year, achieving full capacity production in the next few years.
At the opening ceremony, Singapore's Deputy Prime Minister Heng Swee Keat said that the Fab-Next factory is Siltronic's latest and largest investment project in Singapore. It will enhance the vitality and competitiveness of Singapore's semiconductor ecosystem and create good job opportunities for Singaporean employees.
Pall Singapore Factory Opens
On June 13th, Pall Corporation, a leader in filtration, separation, and purification technology, held the opening ceremony for its advanced manufacturing factory in Singapore, aimed at serving the growing semiconductor industry's regional and global customers.
It is reported that Pall invested about 150 million US dollars in this factory, mainly producing photolithography and wet etching filtration, purification, and separation solutions. With the completion of the new factory, Pall will further strengthen its capability building to support the development of cutting-edge technologies, help expand new applications such as generative AI, and meet the market's strong demand for advanced node semiconductor chips.
UMC Expands Singapore Factory
In May, UMC, a major wafer foundry, held the machine installation ceremony for the third phase of the expansion of its new 12-inch factory, Fab 12i, in Singapore. The first set of machine equipment has already arrived at the factory.The UMC Singapore Fab 12i factory is expected to be completed by the end of the second quarter of this year, with mass production starting in early 2025. The initial monthly capacity is expected to reach 20,000 to 30,000 wafers, providing 22/28-nanometer processes. However, the initial capacity will be gradually increased according to market conditions.
UMC stated that the expansion of the Singapore factory marks an important milestone in the company's expansion plan and will become one of the most advanced wafer factories in Singapore. It is also an important part of UMC's response to geopolitical risks and overseas layout.
GlobalFoundries invests $4 billion to build a new factory in Singapore
In September 2023, chip giant GlobalFoundries announced its latest investment plan in Singapore, expanding its existing Singapore park to build a new factory worth $4 billion. This is also the first step in GlobalFoundries' global expansion plan, followed by increasing production capacity in the United States and Germany.
The new factory will be one of the most advanced semiconductor factories in Singapore, using 300mm wafer manufacturing technology to produce GlobalFoundries' unique rich RF, analog power, non-volatile memory, and other solutions, supporting the development of the terminal market such as automotive, 5G mobile, and security equipment.
The new factory will add 23,000 square meters of clean room space and new administrative office areas, and is expected to increase the annual production capacity by 450,000 (300mm) wafers, bringing the total production capacity of GlobalFoundries in Singapore to about 1.5 million (300mm) wafers.
In fact, GlobalFoundries announced its plan to build a new factory in the Singapore park in June 2021. This is a cooperative project invested in jointly with the Singapore Economic Development Board (EDB) and customers, aimed at addressing the global semiconductor chip shortage and meeting the growing customer demand.
There are several reasons why GlobalFoundries chose to expand its factory in Singapore:
Singapore is one of the important hubs of the global semiconductor industry. According to SSIA data, Singapore accounts for 11% of the global semiconductor output, with a complete supply chain ecosystem, high-quality talent resources, a stable political environment, and a good legal system, providing favorable development conditions for semiconductor companies.
Singapore is GlobalFoundries' largest and most diverse production base in the Asia-Pacific region and the international market. Since the acquisition of Chartered Semiconductor Manufacturing in 2010, GlobalFoundries has invested more than $6 billion in Singapore and has more than 6,000 employees. The current annual production capacity of the Singapore park is 720,000 (300mm) wafers and 692,000 (200mm) wafers, covering all of GlobalFoundries' technology platforms, including 22FDX, 12LP/12LP+, 14LPP, 40/55/65/90/130/180 nanometers, etc.Singapore is an important customer base for GlobalFoundries, including well-known semiconductor design companies such as Qualcomm, MediaTek, and NXP, as well as rapidly growing end markets such as automotive, 5G mobile, and security devices. GlobalFoundries has established long-term cooperative relationships with these customers to jointly develop and optimize chip solutions to meet market demand and expectations.
Japan TOPPANHD to Build New Packaging Substrate Factory in Singapore
Japan TOPPAN Holdings (formerly Toppan Printing) will build a new semiconductor packaging substrate factory in Singapore, with plans to start production by the end of 2026.
TOPPANHD has not disclosed the investment amount for the new factory, but it is estimated to be about 50 billion yen. The new factory will employ 200 people, and the production capacity of the new factory will be increased according to demand in the future, with the total investment expected to exceed 100 billion yen. The initial investment funds will be borne by TOPPANHD, and financial support from major customers such as Broadcom, a large American semiconductor company, may be accepted when expanding production capacity.
Currently, TOPPANHD only produces packaging substrates at the Niigata factory. By expanding the Niigata factory and building a new factory, it is expected to increase the overall production capacity to 2.5 times that of the 2022 fiscal year by the 2027 fiscal year.
Soitec Expands Capacity of Singapore Wafer Factory
Semiconductor substrate material manufacturer Soitec plans to double the production capacity of its silicon wafer factory in Singapore.
At the end of 2022, Soitec announced the groundbreaking of a 373 million US dollar expansion project for its silicon wafer factory in Pasir Ris, Singapore. These wafers will be used for 5G mobile phone chips, as well as automotive and smart devices, and are expected to start production in the first quarter of 2025. After the expansion, the project will double the annual production capacity of Soitec's Singapore factory, with 300mm SOI silicon wafer production capacity reaching about 2 million pieces/year, and its proportion in Soitec's global silicon wafer total output will increase from 50% to more than 66%.
Applied Materials Increases Investment in Singapore
Recently, chip equipment giant Applied Materials announced plans to double its manufacturing capacity, number of employees, and research activities in Singapore in the next few years.This American company is about to announce the expansion of one of its innovation centers located here, which is focused on advanced semiconductor packaging to improve performance and power efficiency without significantly increasing the size and cost of the products.
In fact, as early as December 2022, Applied Materials announced its intention to invest $600 million in building a new production base in Tampines Industrial Crescent, Singapore, which will officially be put into use in 2024. The Asian center of Applied Materials is in Singapore, and this project is also its largest production base outside the United States.
This is just the first step in its eight-year plan in Singapore, and Applied Materials will continue to expand its R&D and manufacturing operations in Singapore.
In addition, the new factory of Applied Materials in Singapore will also conduct research on the commercialization of new technologies, the improvement of semiconductor capacity, and energy conservation. To this end, Applied Materials will cooperate with the Institute of Microelectronics of the Agency for Science, Technology and Research in Singapore to jointly study hybrid bonding and other 3D chip integration technologies.
Furthermore, the local Singaporean company Silicon Box has launched its advanced semiconductor manufacturing foundry with an investment of $2 billion, with the aim of completely transforming the chip manufacturing industry, developing local chip manufacturing capabilities, and enhancing Singapore's position in the global semiconductor manufacturing industry.
It can be seen that in order to meet the long-term demand growth and diversify supply chain risks, many large chip manufacturers and related suppliers are increasing their investment and chip capacity in Singapore.
Singapore's semiconductor industry is becoming more and more perfect.
Over the past few decades, global semiconductor giants have chosen to set up factories in Singapore, such as Infineon, STMicroelectronics, Micron Technology, as well as distribution giants Avnet and Arrow Electronics.
Specifically, in the wafer manufacturing process, Singapore has large factories such as GlobalFoundries, UMC, and SSMC; in the equipment process, there are large production bases such as ASM, KLA, and equipment factories such as Advantest, Teradyne, TEL, Lam Research, and Applied Materials also have large regional headquarters in Singapore; in the packaging and testing process, major packaging and testing cities such as STATS ChipPAC, ASE, Amkor, and Jiangsu Chang'an Technology have set up factories in Singapore.
Looking back at history, it can be found that Singapore's semiconductor industry has gone through several twists and turns.Singapore's semiconductor industry began in the 1960s, primarily focusing on packaging and testing equipment. In the 1980s, the industry started to expand, introducing wafer manufacturing and integrated circuit design companies.
Since then, Singapore's semiconductor industry has grown rapidly.
By 2010, Singapore's semiconductor production capacity accounted for 11.2% of the global share, forming a mature industrial ecosystem.
After 2010, with the rise of the internet economy, the impact of two financial crises, and the global division of labor entering the Chinese era represented by mobile phones, Singapore shifted its investment towards emerging service industries such as IT and finance. The focus and support for the semiconductor industry declined sharply, and its proportion in the industrial structure gradually decreased.
During this stage, Singapore's semiconductor industry faced a "strategic retreat."
It was not until 2014 that the output value of Singapore's electronics industry reached 84 billion Singapore dollars again. In the following years, Singapore's semiconductor industry continued to change. Foreign companies such as MediaTek, RDA Microelectronics, NXP, Micron, and Infineon successively increased their investments. In 2018, Singapore produced computer and electronic components worth 139.6 billion Singapore dollars. By 2020, the industry's output value share rose to 46.3%.
In just a few years, Singapore's semiconductor industry achieved significant growth.
In recent years, trade sanctions and frequent black swan events have brought new fluctuations to the originally stable semiconductor industry chain. The global semiconductor supply chain is undergoing a shift, and the Southeast Asia region is expected to play a significant role.
Among them, Singapore, as a well-known financial and technology center in Asia, has been favored by foreign semiconductor companies and has increased investment in recent years, promoting Singapore to re-embrace the semiconductor industry. Currently, Singapore has a complete semiconductor industry chain, including chip design, manufacturing, packaging, testing, as well as equipment, materials, and distribution.According to forecasts for 2024 given by mainstream market research institutions in the semiconductor industry, almost all institutions have given very optimistic predictions, unanimously believing that the industry will enter a recovery cycle next year. With the global semiconductor market recovering from the current unfavorable situation, Singapore's production prospects are expected to rebound by 2025.
ISA data also predicts that after a decline in manufacturing capacity in Singapore in 2023 and 2024, there will be a strong recovery starting in 2025, making it one of the best-performing countries in the Asia-Pacific region. Moreover, it is possible that the growth in manufacturing output in Singapore during the period from 2025 to 2028 will exceed that of China.
Singapore has already secured a place in the global semiconductor market.
Some time ago, Singapore announced tens of billions of dollars in semiconductor-related investments and set a goal of a 50% increase in manufacturing by 2030, in which the semiconductor industry will play an important role in this blueprint.
Why do major chip manufacturers choose Singapore?
From rising to falling, and then to re-emerging, the semiconductor industry seems to be "summoned and dismissed" under Singapore's strategic planning. Where exactly is Singapore's magic?
Strong policy support: First of all, in terms of policy, we can see the Singaporean government's emphasis on the semiconductor industry.
The Singaporean government has played a key role in attracting semiconductor manufacturers by providing a stable and business-friendly environment, which is crucial for long-term investment in manufacturing.
After years of development, Singapore has a systematic set of preferential policies for foreign investment, such as:
Double Taxation Agreement (DTA) network: Singapore has an extensive Double Taxation Agreement (DTA) network with more than 80 countries and regions worldwide. The benefits include avoiding double taxation, lower withholding taxes, and a preferential tax system, all of which play an important role in minimizing the tax burden of holding company structures.Tax System Friendly: Singapore's tax system is considered "simple and investor-friendly." The highest corporate tax rate for taxable income in Singapore is 17%, with capital gains tax and dividend income tax at 0%, and no withholding tax on dividends paid from Singapore. Additionally, all foreign-sourced income is tax-exempt as long as the income is taxed in a country/region with an overall tax rate of at least 15%. Singapore's regulatory framework provides a level playing field for foreign investors, with no foreign ownership restrictions and no foreign exchange controls.
Singapore announced the National Research Foundation (NFR) "Research, Innovation, and Enterprise 2025 Plan," in which the Singapore government will maintain its investment in research, innovation, and enterprise at 1% of the country's GDP (about 25 billion USD) from 2021 to 2025, to support the semiconductor industry in seizing new growth opportunities.
At the same time, the Singapore government is working hard to attract investment by providing tax incentives and land, as well as supporting research and development. Singapore's well-developed infrastructure provides support for semiconductor manufacturing, and its strong intellectual property (IP) protection ensures the security of innovation.
For example, in terms of a robust intellectual property (IP) system, Singapore is backed by a trustworthy legal system and a strong intellectual property infrastructure. The government's intellectual property policy aims to encourage innovation, creativity, and development in Singapore's industry and commerce.
In addition, government support also includes providing incentives, donations, and regulatory assistance, and assistance with work visas and regulatory issues has greatly improved the efficiency of corporate projects.
Overall, Singapore's comprehensive and robust foreign investment attraction system provides a good investment environment for various industries and creates a favorable environment for semiconductor companies.
Mature Ecosystem: One of the reasons Singapore is popular is its mature and large ecosystem, including supporting industries, research institutions, and infrastructure, all of which create a favorable environment for semiconductor manufacturers.
Singapore has not only attracted chip manufacturers but also companies in the entire semiconductor ecosystem, including chip designers, manufacturers, packaging and testing companies, and equipment suppliers. This ecosystem is crucial for semiconductor companies because having a network of similar enterprises can promote cooperation and innovation.
Mature Workforce: Singapore's advantage begins with talent.
Singapore has invested heavily in education and workforce development, creating a well-trained and highly skilled talent pool, which is crucial for an industry that demands precision and professionalism.Bain & Company partner Peter Hanbury stated that Singapore has a pool of highly educated talent, which makes it an attractive location for the semiconductor manufacturing industry.
Efficient logistics system: Singapore's geographical location and transportation also provide convenience for supply chain diversification.
Chips need to circulate smoothly globally, and Singapore also provides an efficient logistics system, becoming one of the world's logistics centers. It is reported that 24 out of the top 25 logistics companies in the world have settled in Singapore, and the logistics system is very efficient, which can better connect with customers in Taiwan, mainland China, Japan, and South Korea.
Geopolitical factors: The competition between the United States and China in the semiconductor field is heating up, but Singapore is relatively neutral in terms of geopolitics, so it is less affected by geopolitical conflicts. In addition to Singapore, Southeast Asian countries such as Malaysia and Vietnam also have a certain attraction to international chip manufacturers.
In summary, Singapore's political and economic positioning has attracted a large number of companies seeking manufacturing bases and supply chain diversification. With its favorable tax and regulatory environment and highly skilled talent, Singapore has become one of the preferred destinations for high-value-added manufacturing investment, and it also has a strong intellectual property protection system to protect semiconductor companies.
Singapore wins the "chip race"
From the current global economic landscape, the semiconductor industry is undoubtedly the main battlefield for technology and economy.
According to Bloomberg statistics, large economies represented by the United States and the European Union have invested tens of billions of dollars in research and development and mass production of the next generation of semiconductors to strengthen local production capacity. At the same time, South Korea and Japan have also joined the chip "subsidy race."
As a large amount of capital continues to flow into the semiconductor industry, the global chip competition will become more intense.
Under this trend, from Vietnam to Thailand, and then to Malaysia, Southeast Asian countries are attracting more and more technology investment to attract chip manufacturers to invest.In comparison, Singapore is rapidly becoming a global hotspot for the chip manufacturing industry.
The semiconductor industry in Singapore, as a vibrant and potential-filled sector, has undergone years of development and change, becoming an indispensable part of the global semiconductor market. Faced with the tense and unstable global semiconductor supply chain, the Singapore semiconductor industry has also demonstrated its strong resilience and adaptability.
Nowadays, with major chip manufacturers frequently betting on Singapore, as well as the government or local enterprises' emphasis on the semiconductor industry, it indicates that Singapore is increasingly integrating into the global map.
At this stage, the pivotal role played by Singapore is becoming increasingly prominent, and this factor may also continue to accelerate the entry of giants, bringing huge benefits and opportunities to the Singapore semiconductor industry, and injecting more vitality and creativity into the global semiconductor market.
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