THE electronics industry has been hit by the global economic downturn, but this has not deterred French wafer maker Soitec from opening a $700 million plant in Pasir Ris on Friday.

Speaking at the opening ceremony, Trade and Industry Minister Lim Hng Kiang said that although there is 'some uncertainty in the short-term demand' of the industry, the long-term outlook remains positive.

'The establishment of Soitec's first plant outside France, in Singapore, is indeed a very significant milestone for Singapore's electronic industry,' he said.

Soitec's new 2.7 ha facility is Singapore's first plant to produce silicon-on-insulator (SOI) - a new silicon generation which boosts speed of chips by 30 per cent, while at the same time cutting energy consumption by half.

This product represents the firm's strength in innovation, said Soitec president and chief executive Andre-Jacques Auberton-Herve.

'Leaders always invest during downturns. We will see in 2009 acceleration in innovation and leaders will bring new products faster... to lead a new wave of grwoth and prepare the upturn', he said.

The facility is currently operating at 10 per cent of capacity with 100 staff, 90 of whom are Singaporeans.

Mr Auberton-Herve said the staff strength will go up to 500 when the plant is running at full capacity.

Despite high labour costs, he said Singapore's 'eco-system' of semi-conductor firms and highly-skilled labour makes the location 'very attractive'.

'We are committed for the long term in Singapore,' he said.