Singapore pours it on even in rough waters
08/01/2001
Singapore has endured its fair share of economic hardships during this downturn, but instead of running for cover, the island nation is forging full steam ahead while weathering the latest storm.
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Aimed at promoting itself as an investment hub for foreign investors and responsible for transforming Singapore into a wafer-manufacturing powerhouse, the country's Economic Development Board (EDB) launched the Industry 21 project in early 1999 to develop knowledge-based industries in Singapore over the next 10 years.
Because Asian countries such as Malaysia, Thailand, Hong Kong, Taiwan, India, and China are beginning to flex their manufacturing muscle — and attract foreign investment away from Singapore — the board realized that its Industry 21 program was necessary to keep Singapore at the top of the list for wafer fabrication locations.
Economic growth strategies
The EDB has developed several growth strategies for the Industry 21 plan in order to achieve its goals. The program plans to diversify among and within the key industry clusters, hoping that a balanced mix of industries and markets will help achieve sustainable growth and minimized vulnerability to fluctuations in specific sectors. Industry 21 is also focused on building up world-class capacity and global coverage to compete effectively and remain attractive to investors.
Additionally, the board expects to promote innovation and to develop local and foreign talent through the program. The guidelines are also focused on creating a favorable business environment and infrastructure as well as emphasizing technology, innovation, and capabilities of the manufacturing and services industries.
Singapore felt the need to move up the manufacturing value-chain and position itself as a high-technology service provider in order to attract hi-tech investments. Greater attention was spent on developing Singapore as a global center to build new electronic clusters and enhance manpower capabilities in new areas such as R&D in wafer plant technology, Bluetooth technology, compound semiconductors, and MEMS.
Moreover, the EDB recently launched the Postgraduate Manpower and the Research and Training programs at both its universities. "They will ensure a greater availability of manpower with postgraduate-level training, since we need more such highly trained technical manpower for the knowledge economy of the future," said George Yeo, Singapore's trade and industry minister. Both these programs expect to train 1250 engineers over the next three years.
By providing the right infrastructure and relaxing tough immigration laws, Singapore has attracted talented programmers, engineers, and software experts from India, China, Taiwan, and the Philippines to work in various government-linked research houses that are less likely to expel staff during a downturn. "This would counter the brain-drain affecting industrialized countries like Singapore, as well as equip us with the necessary skills to build Singapore's high-end manufacturing base in Asia," said Arthur Lee, senior research fellow at the University of Singapore.
According to a recent poll of 19 countries conducted by Time Asia and Fortune Asia, Singapore was picked as the number one performer with 80% of respondents ranking it "good" or "excellent" in terms of business, trade, and investment, while Hong Kong came in a close second with 78%. "This shows that Singapore is still a very viable option for many multinationals to expand their presence in Asia, using it as a regional hub, especially in the electronics sector," said Steve Chng, director for Opentech Technology, Singapore.
Area fabs
Proof of the country's success is Chartered Semiconductor, which has invested $3.5 billion in its 300mm Fab 7, currently in the equipment selection phase. The company hopes to have its first qualified wafers from the new fab by the middle of next year. And although Chartered is running at a dismal 30% capacity utilization, it is pressing on with its plans to increase capital spending 10% in 2001.
"Singapore is emerging as the next center of wafer production in the world," said Kevin Meyer, Chartered VP of worldwide business development. "Contrary to the rest of the world, Singapore is seeing an increase in capital spending during this downturn. It's a place where people feel comfortable relocating."
"We are seeing others [such as Applied Materials] locating to Singapore," Meyer continued. He went on to say that Singapore has good infrastructure and school systems, and 98% of its population is English-speaking.
This year Singapore also became home to United Microelectronics Corp. (UMC)'s advanced 300mm wafer foundry. It's the first of its kind built by UMC — considered the world's second-largest maker of computer chips next to Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) — outside of Europe and Taiwan. The company plans to invest $3.6 billion in its new venture together with Infineon Technologies and several other contract customers.
Another milestone is the opening of a new $1.2 billion wafer fab by Systems on Silicon Manufacturing Co. (SSMC), a joint venture between Philips Semiconductors, TSMC, and the Economic Development Board Investments of Singapore. The SSMC wafer fab will use CMOS processing to produce high-volume system-on-chips (SoCs). The initial output will be chips with sizes of 0.25µm and 0.18µm, accelerating to 0.15µm and 0.12µm in 2002. SSMC plans to churn out 30,000 200mm wafers/month at full capacity.
In the short term, the EDB predicts that electronics growth in Singapore will be moderate in 2001 and primarily driven by the semiconductor industry, caused by project expansions in wafer fabrication and test and assembly centers. The semiconductor sub-cluster grew 73.4% to a record $14.4 billion last year. With the downward spiral in the worldwide demand for electronics, Singapore's national growth figures, previously estimated to surpass 7% this year, were trimmed to around 3.5-5%. "Singapore's position as an Asian hub for contract manufacturing, PCB manufacturing, and disk drive manufacturing, is seriously under threat," Lee commented. That's why they are moving aggressively to keep forging ahead.