In June, Singapore welcomed a new 12-inch wafer fab.
German wafer manufacturer Siltronic has officially opened its semiconductor wafer factory in Singapore, with an investment of 2 billion euros (approximately 3 billion Singapore dollars, 15.5 billion RMB). This 150,000 square meter factory is Siltronic's third wafer manufacturing plant in Singapore, adjacent to the other two plants within the Tampines Wafer Fab Park, connected by a skybridge. The new factory covers an area of 300,000 square meters.
The factory mainly produces 12-inch (300mm) semiconductor wafers, and it is expected to produce about 100,000 wafers per month from the start of production to the end of the year. This will be Siltronic's second 12-inch semiconductor wafer factory in Singapore.
Nowadays, the semiconductor industry has become one of the two pillar industries of Singapore's electronics industry, with the total output value of the electronics industry accounting for as much as 26% of the manufacturing industry's output value. Singapore has attracted leading chip companies from all over the world to set up factories and even establish R&D centers in Singapore.
According to Statista's data forecast, the Singapore semiconductor market is expected to grow by 7.85% (2024-2027), and the market size will reach 56.91 billion US dollars (about 7.7 billion Singapore dollars, 412 billion RMB) by 2027.
01
History of the development of Singapore's semiconductor industry
In fact, Singapore's semiconductor industry started quite early and has been well-planned for a long time.
As early as 1968, the Singapore National Semiconductor established an assembly and testing factory, and in 1986, it became the second country in the world to enter the semiconductor foundry industry. In 1969, Texas Instruments established a factory in Singapore; in 1987, Singapore Chartered Semiconductor was officially established; since then, major companies such as Infineon, Micron, HP, ST, and others have also gone to Singapore to set up factories.Since then, Singapore's semiconductor industry has grown rapidly.
In the 1990s, the vast majority of Singapore's semiconductor companies were foreign-owned, bringing chip design, manufacturing, packaging, and testing technologies to Singapore. This then promoted the localization of the semiconductor industry and enhanced its own semiconductor design and production capabilities, making Singapore an important part of the global semiconductor industry.
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, influenced by two financial crises, and the global division of labor represented by mobile phones entering the Chinese era, Singapore turned to invest in emerging service industries such as IT and finance. The emphasis and support for the semiconductor industry declined sharply, and its proportion in the industrial structure gradually decreased. In 2011, Singapore even sold its stake in Anhua Gao.
At this stage, Singapore's semiconductor industry ushered in a "strategic retreat."
However, by 2014, Singapore's semiconductor industry made a strong recovery, with output value reaching 84 billion Singapore dollars. In this regard, the "Diplomat" analyzed that Singapore has become a country attracting high value-added manufacturing investment with its favorable tax and regulatory environment, and a large number of highly skilled workers.
In the following years, Singapore's semiconductor industry continued to change. Foreign companies such as MediaTek, Rui Di Ke, 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 increased to 46.3%.
In just a few years, Singapore's semiconductor industry achieved significant growth.
In the face of the COVID-19 pandemic and global turmoil, Singapore went against the trend, with major manufacturers such as Global Foundries, Siltronic, and Soitec going to Singapore to set up factories. Although many factories that were originally in Singapore moved to countries like Malaysia and Vietnam due to labor costs, the overall semiconductor industry in Singapore is still on an upward trend.
02Overseas Enterprises Accelerate Deployment in Singapore
Singapore's semiconductor industry has a very high level of development, covering a complete industrial chain from design, manufacturing, packaging, testing to equipment, materials, and distribution, including many internationally renowned semiconductor enterprises. Such as Texas Instruments, STMicroelectronics, Micron, GlobalFoundries, TSMC, UMC, World Advanced, ASE, etc.
Due to trade wars and various black swan events, many overseas enterprises have accelerated investment and deployment in Singapore in recent years.
STMicroelectronics: In 2019, STMicroelectronics opened its latest wafer manufacturing factory in Singapore. In 2020, STMicroelectronics, together with the Singapore Agency for Science, Technology and Research (A*STAR) and Japanese manufacturing tool supplier ULVAC, opened a cutting-edge R&D line at its Singapore factory. This is the world's first "Lab-in-Fab" laboratory, which will produce piezoelectric MEMS, with applications in various market segments, such as smart glasses, healthcare devices, and 3D printing. It can be said that the growth and development of STMicroelectronics in Singapore is one of the results of Singapore's continuous investment in the field of scientific research over the years.
GlobalFoundries: On September 12, 2023, the wafer foundry giant GlobalFoundries announced the official opening of its expanded wafer factory in Singapore with an investment of $4 billion. It is reported that the wafer factory covers an area of 23,000 square meters, and the first equipment was moved into the facility in June 2022, less than a year after the groundbreaking ceremony. The building design prioritizes sustainability and has been awarded the Green Mark GoldPlus certification for administrative and manufacturing buildings by the Singapore Building and Construction Authority. It is equipped with the latest technologies and solutions to manage resources and waste, recycle and reuse water, and improve overall energy efficiency.
Siltronic: In October 2021, Siltronic broke ground for a new 12-inch wafer manufacturing factory, which officially opened in June this year, with an investment of 2 billion euros (about 3 billion Singapore dollars, 15.5 billion RMB).
UMC: In 2022, United Microelectronics Corporation announced that it will build a new manufacturing factory next to the current 300mm wafer factory (Fab 12i) in Singapore. The new factory will have a monthly capacity of 30,000 wafers for each phase and is expected to start production at the end of 2024.
NXP: In June this year, TSMC's holding wafer foundry World Advanced and NXP Semiconductors announced that they will jointly establish a joint venture called VisionPower Semiconductor Manufacturing Company (VSMC) in Singapore, and build a 12-inch (300mm) semiconductor wafer manufacturing factory, with a total investment of $7.8 billion. It is expected that the construction of the wafer factory will officially start in the second half of 2024, with mass production and the first batch of chip products supplied to customers planned for 2027, and the monthly production capacity of 12-inch wafers is expected to reach 55,000 pieces by 2029.
After the first wafer factory successfully achieves mass production, World Advanced and NXP will also consider continuing to build a second wafer factory.
Micron: Micron completed the construction of its third NAND wafer factory in Singapore in 2019. In November 2020, Micron stated that it would start mass production of the world's first 176-layer NAND chip at its Singapore manufacturing factory.Pall Corporation: Pall Corporation's new factory in Singapore will officially commence operations this year. With a total investment of 150 million US dollars, the factory has added two important product lines: Litho lithography and WET wet chemical processes, which will provide strong support for the manufacturing of logic and memory chips for advanced process nodes in the Asia-Pacific region. The Singapore factory will serve as a regional hub for Pall's customers in the Asia-Pacific region, meeting the rapidly growing demand in the Asia-Pacific, especially in China, and is expected to deliver products to Chinese customers in the third quarter.
Soitec: On December 13, 2022, Soitec announced the official groundbreaking of the wafer factory expansion project located in Pasir Ris Wafer Fab Park, Singapore. The expanded factory will be dedicated to the production of 300mm SOI wafers, used for smartphone chips, especially for 5G communication, automotive, and smart devices. It is expected that after the expansion is completed in 2024, Soitec's Singapore factory will be able to double its annual production capacity, with 300mm SOI wafers reaching about 2 million pieces/year.
It is understood that in the electronics industry, Singapore produces about 20% of the world's semiconductor equipment. The Economic Development Board (EDB) shows that the number of semiconductor companies in Singapore has exceeded 300. The achievements in the semiconductor field are even more eye-catching, with Singapore manufacturing about 70% of the world's semiconductor lead wire bonding machines, accounting for 20% of the semiconductor equipment market share. Singapore has more than 300 semiconductor companies, including 40 IC design companies such as Texas Instruments, STMicroelectronics, Infineon, and Micron. In addition, there are 14 silicon wafer factories, 8 wafer factories, 20 packaging and testing companies, and other companies engaged in materials, manufacturing equipment, photo masks, and other related industries. It can be said that Singapore has built a complete and mature semiconductor industry chain, covering all aspects from IC design to manufacturing and packaging and testing, with semiconductor companies from Europe, the United States, Japan, and other parts of the world, such as Infineon, STMicro, ON Semiconductor, and large agents like Avnet, all setting up their Asia-Pacific headquarters in Singapore.
03
Why do overseas companies favor Singapore for layout?
In just a few years, Singapore's semiconductor investment has increased rapidly, attracting a large amount of foreign investment. There are mainly the following reasons:
Policy Support: In December 2020, Singapore announced its National Research Foundation (NFR) "Research, Innovation, and Enterprise 2025 Plan" (Research Innovation and Enterprise 2025, referred to as RIE2025). The goal of this plan is that from 2021 to 2025, the Singapore government will maintain its investment in research, innovation, and enterprise at 1% of the country's GDP, which is about 25 billion US dollars. According to the RIE2025 plan, the Manufacturing, Trade, and Connectivity (MTC) sector will strengthen Singapore's position as a manufacturing center and a global-Asian technology, innovation, and enterprise node. Singapore's RIE investment will also consolidate the country's competitiveness in emerging opportunity areas, such as connectivity and supply chain management. Specifically, in the semiconductor field, for example, Singapore's public research institutions will enhance their capabilities in technologies such as Micro-Electro-Mechanical Systems (MEMS) to support the electronics industry in seizing new growth opportunities, such as in autonomous driving and healthcare wearable devices.
In addition, Singapore has an extensive network of Double Taxation Agreements (DTAs) with more than 80 countries/regions. 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.
At the same time, the Singapore government is working hard to attract investment by providing tax relief 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.
A series of measures have created a favorable investment environment in Singapore.Mature Semiconductor Industry Chain: Singapore boasts a mature and extensive ecosystem that includes 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 across 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.
Geographical Advantage: Located at the heart of the Southeast Asian region, Singapore is an important hub connecting Asia with Europe, the Middle East, Africa, and other regions. It has one of the world's busiest ports, first-class infrastructure, and the ability to connect with global markets. Coupled with government-provided tax incentives, the establishment of TradeNet, a one-stop service platform that greatly simplifies the import and export trade process and improves customs efficiency, Singapore has become one of the world's important centers for logistics and supply chains.
This small city-state of Singapore is home to the world's largest transshipment container port, connected to more than 600 ports globally. This provides favorable conditions for the smooth circulation of chips worldwide.
At the same time, Singapore's proximity to Taiwan allows it to conveniently take over TSMC's overflow production capacity.
Talent Advantage: To promote the localization of the semiconductor industry, the Institute of Microelectronics (IME) was established in Singapore in 1991. By undertaking projects from the government and domestic and foreign enterprises, IME has enhanced Singapore's semiconductor design and production capabilities. Today, IME has cultivated a large number of talents for Singapore's semiconductor industry.
Geopolitical Advantage: As trade wars intensify, the costs for semiconductor companies in global trade are increasing, especially between the two major markets of China and the United States. Singapore's neutral foreign policy has made it less affected, becoming a policy "safe haven" in trade wars.
Singapore's role as a hub is becoming increasingly prominent, and this factor may continue to accelerate the entry of giants, bringing huge benefits and opportunities to Singapore's semiconductor industry, and injecting more vitality and creativity into the global semiconductor market.
04
Will Singapore become the next semiconductor manufacturing center?
Although Singapore is increasingly integrated into the global map, and major chip companies are frequently betting on Singapore, the biggest problem of Singapore's semiconductor industry is the lack of its own leading companies.Although a large number of international semiconductor giants have been introduced, the technology and market of these enterprises have a very weak relationship with Singapore. This is very suitable for those who are content with a small fortune, but for the real outstanding talents, perhaps the European and American, as well as Chinese and Japanese markets, can offer more room for development.
With the development of the technology war, countries have introduced a large number of incentive policies to increase investment attraction, such as the "Chip Act" in the United States and Europe. This may lead some semiconductor companies in Singapore to consider moving part or all of their production lines to areas with lower costs and more favorable policies. In addition, some emerging countries are also actively developing their own manufacturing and technology industries, which may pose competitive pressure on Singapore's industries.
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