Singapore is struggling to restore its IC industry’s former glory, but experts are not optimistic regarding its ambition to catch up with Taiwan, surpassing China and South Korea in the process. Taiwan already have a mature ecosystem for the foundry model, especially its electronics manufacturing industry, in addition to the lower operational costs it offers. Furthermore, neighboring countries China and South Korea are also fiercely competing in the semiconductor industry too, putting Singapore at a disadvantage. Currently, Singapore only accounts for about 5% of global wafer fabrication capacity.
Nevertheless, Singapore still have a shot, thanks to the trend of restructuring global semiconductor supply chain. The development comes in time when Singapore, under the recently announced “Manufacturing 2030”, seeks to boost the city-state’s manufacturing sector by 50% in ten years. Consequently, Singapore has seen a surge of inward investment into its semiconductor industry. GlobalFoundries, for example, has decided to invest US$ 4 billion to expand its production capacity in Singapore, where 40% of its chips have been manufactured. Meanwhile, the company is also investing US$ 1 billion each in fab expansion in Dresden, Malta and New York.
The decision of GlobalFoundries is partly geopolitically motivated. As Tom Caulfield, GlobalFoundries CEO, put it: “70 percent of all foundry manufacturing takes place in Taiwan, a couple of hundred miles away from China, from one company. It put a huge risk to the world economy.”
While Singapore might benefit from GlobalFounries’ latest investment, it also ironically highlights the failure of the country’s earlier semiconductor policy.
Next to Taiwan, Singapore was the second nation in the world to enter the semiconductor foundry industry, in 1986. Due to the strong support of the Singaporean government and its Sovereign Wealth Fund Temasek, its semiconductor champions Chartered Semiconductor Manufacturing (CSM) was once the world’s third largest foundry. Another national champion, STAATS ChipPac, was also the world’s fourth largest assembly and testing company. The two represented 2% of the fund’s portfolio. As Taiwan’s chip industry began to overtake Singapore, however, the city-state’s chip industry lost its shine. In 2009, Advanced Technology Investment Company, a subsidiary of Abu Dhabi’s sovereign wealth fund Mubadala, acquired CSM, and later integrating it into GlobalFoundries. In 2015, STAATS ChipPac was in turn sold to China’s Jiangsu Changjiang Electronics Technology (JCET), a major champion backed by the Chinese government.