SPEECH BY MR S ISWARAN, MINISTER OF STATE FOR TRADE & INDUSTRY, AT THE GROUNDBREAKING CEREMONY OF SOITEC’S 300MM SILICON-ON-INSULATOR (SOI) WAFER FABRICATION FACILITY, ON 28 AUGUST 2006, 10AM, AT PASIR RIS WAFER FAB PARK

President and CEO of Soitec

Ladies and gentlemen

Good morning,

Let me first extend a very warm welcome to Mr André-Jacques and our friends from Soitec.I understand you have flown more than 10 hours to be in Singapore for this occasion. Thank you for your commitment and dedication to this project - the first venture by Soitec in Singapore.

Soitec’s investment is equally important to us in Singapore for it marks the start of a new chapter in our semiconductor industry.

The Semiconductor Industry is Integral to Singapore’s Manufacturing Sector

Since the late 1960s, when the first assembly and test plant was established in Singapore, our semiconductor industry has grown significantly and has provided a strong boost to our manufacturing sector. The semiconductor industry is an important cluster which anchors the growth of manufacturing in Singapore.

From assembly and testing, we have gradually moved into integrated circuit (IC) design and wafer fabrication. Along that journey, the industry has been at the forefront in the application of new technologies. From our first 5-inch wafer fab in 1984, our wafer fabs are now producing 12-inch wafers utilising 65-nanometer technology, which is the most advanced technology node in production today.

The semiconductor industry now employs over 37,000 people in Singapore, and accounted for about 30 billion Singapore dollars in output last year. We are also very proud that a small country like us can account for 10% of the global foundry wafer output, and be home to 14 world-scale silicon wafer fabs, 40 IC design companies, and 20 assembly and test plants. This includes 4 of the world’s top 10 fabless IC design companies, 3 of the world’s top wafer foundries and 3 of the world’s top assembly and test subcontract companies.

These top players are here because of Singapore’s overall conducive business environment.Here in Singapore, they are able to create competitive solutions for the world market. While we are not the cheapest location for businesses, companies still invest in Singapore because of our overall competitiveness, taking into account factors like our macroeconomic strength, political stability, skilled workforce and productivity.Soitec’s investment is a clear testament to our continued overall competitiveness.

Pioneering in Singapore: 1st Silicon-on-Insulator (SOI) Wafer Fabrication Plant

This project is significant in several ways.

Firstly, Soitec’s 300mm Silicon-on-Insulator(SOI) wafer fabrication plant will be the first such project in Singapore. As a pioneer, Soitec will help to seed the development of a new SOI wafer industry in Singapore and further expand the base of our semiconductor industry.

The know-how that Soitec brings to Singapore is impressive. The SOI technology allows chips to function 30% to 40% faster than conventional chips, while consuming only half as much power. SOI wafers also have a wide range of downstream applications and can be used in advanced semiconductor devices like microprocessors, smart power devices, optoelectronic circuits and LCDs.

Secondly, this plant is Soitec’s first manufacturing facility outside France. We are honoured that Soitec has chosen Singapore over many other competing locations. It is a strong vote of confidence for Singapore, and we look forward to a long, close and fruitful collaboration.

Thirdly, Soitec is the global leader in its domain – with 80% direct market share in the SOI wafer market and another 10% market share through its licensees. With such a prominent player paving the way in Singapore, we can expect strong growth in the SOI wafer market.

And Soitec’s decision to enter our semiconductor community will certainly inspire many others to emulate them.

Singapore Supports Soitec’s Growth

Besides serving as a manufacturing base, Singapore can support Soitec in other areas like intellectual property protection, R&D and logistics.

Singapore has a robust regime for the protection of intellectual property rights (IPR). According to the Political and Economic Risk Consultancy (PERC), Singapore has had the lowest IPR risk in Asia for three consecutive years, from 2002 to 2004. Soitec and other IP-rich companies can manufacture their cutting-edge products here in Singapore with the confidence that their proprietary technology is well protected.

The Singapore government has also stepped up its investments in research and innovation capabilities. Public R&D funding will be doubled to 12 billion Singapore dollars over the next 5 years. The government has also set up a National Council on Research, Innovation and Enterprise chaired by our Prime Minister, and a National Research Foundation led by our former Deputy Prime Minister Dr Tony Tan, to oversee the R&D effort in Singapore. This will ensure that Singapore continues to strengthen its research infrastructure and has enough talent for industry to tap on. Soitec, with your roots in a research institute, will no doubt have opportunities to collaborate with Singapore’s research institutes, such as the Institute of Microelectronics, on R&D projects to extend your technology portfolio.

In terms of logistics, our established logistics infrastructure, together with our connectivity to the world, ensures that Soitec’s products can be made in Singapore and distributed to the rest of the world with ease and speed.

With these factors, I am confident that Singapore and Soitec are off to a good start which will serve as the foundation of a strong and lasting partnership. Once again, I thank Mr André-Jacques for inviting me to this happy occasion, and I congratulate everyone who has had a hand in writing this new ‘chapter’ in the history of the semiconductor industry in Singapore.

Thank you.