A screen displays the company logo for semiconductor and chipmaker GlobalFoundries Inc. during the company's IPO at the Nasdaq MarketSite in Times Square in New York City, U.S., October 28, 2021. REUTERS/Brendan McDermid
SINGAPORE: Foreign chip makers and related firms here are sticking to their expansion plans despite Washington’s efforts to keep cutting-edge chips out of China and woo investments back to the United States, experts said.
Companies including New York-based GlobalFoundries and Dutch firm ASML said they expect that the impact of the new US rules imposed in 2022 will be manageable.
In fact, Singapore will be “considered favourably” as GlobalFoundries decides where to further boost capacity, said Tan Yew Kong, senior vice-president and general manager of the firm here.
He told The Straits Times that “the uncertain global economic outlook and inventory correction have impacted customer demand and disrupted the supply chain”, but the industry will endure this cycle and return to growth.
Tan added: “Our Singapore expansion fab (manufacturing plant), for which we broke ground in 2021, remains on track and, in just a year, we moved our first tool into the cleanroom in June 2022.
“We are ramping up production in tandem with market demand and availability of tools that are still being moved in.”
Recent events have reinforced the importance of having a balanced supply chain across the globe.
Tan said: “With the strong support from the government to grow the semiconductor (industry) on the island and the great operational performance in GlobalFoundries-Singapore Fabs, a Singapore site will be considered favourably.”
The group, which said in June 2021 that it would invest US$4bil (RM17.8bil) to increase its production capacity here, has manufacturing sites across Asia, Europe and the United States.
GlobalFoundries employs about 4,500 workers in Singapore, a number that will grow as production is ramped up.
Chips, or semiconductors, are the brains of electronics. They are used in almost every aspect of life, from smartphones and refrigerators to data centres, medical equipment and transportation.
Chang Chin Nam, senior vice-president and head of semiconductors at the Economic Development Board, said the US export measures were not targeted at Singapore.
“Nonetheless, companies in Singapore cannot be completely sheltered from geopolitical tensions,” he added, noting that Singapore’s strong fundamentals as a stable, neutral and innovative business hub have given companies the confidence to make their decisions on major manufacturing projects.
Singapore has added to its diverse semiconductor ecosystem over the past two years with research and development as well as manufacturing activities.
It has attracted investments by global companies such as Micron Technology, United Microelectronics Corp, STMicroelectronics, Siltronic and Soitec.
“Semiconductor packaging and testing have become more innovation-intensive and automated, and therefore more suited to Singapore’s comparative advantages over the longer term,” said Chang.
The semiconductor industry accounts for about 7% of Singapore’s gross domestic product, and one-third of manufacturing output.
Nitin Soni, senior director in Fitch Ratings’ Asia-Pacific technology, media and telecoms team, said the impact of the US export controls on the sector here has been limited, as the rules are aimed at critical technology that can be used in military equipment.
Rather, the global downturn in memory chips – one of the largest sectors in the US$600bil (RM2.7 trillion) semiconductor market – over the past six to nine months has had a greater impact on the sector here. Soni believes that Singapore could benefit as chip makers from the United States and its allies turn to other markets.
This is because foreign memory chipmakers Samsung and SK Hynix will need to consider the reliability of US one-year waivers in assessing whether it still makes sense to continue investing in leading-edge production in China.
Rakesh Agarwal, advisory partner at KPMG in Singapore, believes the US rules will inevitably impact manufacturers here, due to the highly globalised nature of supply chains.
He said: “Singapore is a research and development hub for some of the world’s largest microchip firms. It is also a supplier of 11% of the world’s semiconductors and 20% of chip-making equipment.” — The Straits Times/ANN
