Question

Mr Yip Hon Weng: To ask the Minister for Trade and Industry (a) what are the implications of the CHIPS and Science Act that was passed in the United States in August 2022 on Singapore’s semiconductor manufacturing industry, considering the recent reports by the Economic Development Board about the shrinking manufacturing output in Singapore; and (b) what are the long-term plans for the sector if global demand for semiconductors remain low.

Written Answer by Minister for Trade and Industry Gan Kim Yong

1. The semiconductor sector is currently our largest manufacturing segment, contributing 7% of our GDP in 2021. Notwithstanding the 4.1% year-on-year decline in semiconductor manufacturing output in July 2022, the sector has grown at a Compound Annual Growth Rate (CAGR) of 10.6% over the past ten years. We expect medium-to-long term growth in the semiconductor industry to be robust given the megatrends of automation, industrial Internet of Things, 5G and Artificial Intelligence.

2. However, we expect global competition for semiconductor investments to intensify, for economic and strategic reasons. The CHIPS and Science Act is an example of how other countries are introducing measures to attract semiconductor investments. Under the Act, a total of US$52.7bn in subsidies is earmarked to support semiconductor manufacturing and research, of which US$39bn is dedicated to subsidising the building of new fabs in the US. Spurred by the recent passing of the Act, companies such as Intel have announced plans to increase semiconductor production in the US.

3. We must maintain our competitive position in the face of such challenges. But we cannot compete on the basis of financial incentives alone. Our strong fundamentals, including our stability, robust intellectual property protection regime, and skilled workforce, have allowed us to develop and grow the semiconductor sector over the decades. To support the growth in the sector, the Government has continued to partner key companies across the value chain, many of whom are global leaders in the sector, to invest in leading edge manufacturing capacities and workforce training in Singapore. Recent investments by Globalfoundries, UMC, Siltronics, and Pall Corporation are testament to the strong partnership that we have built with the industry leaders. We also work with partner manufacturers to conduct complementary activities in Singapore, including in R&D and supply chain management, to diversify their base of activities and deepen their operations here. In addition, we are also working with them to address their longer-term challenges, including to achieve their sustainability ambitions. Collectively, we believe that these strategies will allow Singapore to continue to grow and develop the sector, to ensure we remain a critical node in the global semiconductor value chain amidst the intensified competition.