Close collaboration with Govt vital for semiconductor industry to stay resilient: Alvin Tan

SINGAPORE – Local semiconductor companies need to work hand in hand with the Government to help the industry stay resilient amid global uncertainty, noted Minister of State for Trade and Industry Alvin Tan on July 10.

Mr Tan said close collaboration with policymakers will allow the sector, which relies heavily on global – and increasingly vulnerable – supply chains, to focus on new growth areas in order to navigate choppy waters.

These areas include diversifying beyond chip manufacturing, such as in packaging and software design, and creating new traineeships and research partnerships.

Mr Tan said at an event organised by the Singapore Semiconductor Industry Association (SSIA) at Grand Copthorne Waterfront Hotel: “Singapore’s history is long intertwined with the semiconductor industry.”

He said the sector must go “glocal” to offset supply chain disruptions. This would involve multinationals building networks of local small and medium-sized enterprises (SMEs) that can capitalise on opportunities to expand overseas and, in turn, strengthen supply chains.

“This strong synergy across the entire semiconductor supply chain creates new jobs and opportunities for our SMEs,” noted Mr Tan.

He cited three key areas where the Government is investing to future-proof the industry: intelligent manufacturing, sustainability, and supply chain resilience.

The Government launched the National Semiconductor Translation and Innovation Centre (NSTIC) for Gallium Nitride on June 26 to focus on advanced semiconductors for 5G and 6G communications systems and satellites.

Another $500 million fabrication facility under NSTIC is expected to be operational in 2027, while artificial intelligence centres of excellence are in the pipeline to boost the technology’s adoption among semiconductor companies.

This initiative will be underpinned by an agreement between SSIA, Nanyang Polytechnic and the national AI Singapore programme signed on July 10 to groom talent in AI engineering fields for the semiconductor industry.

Global players are also ramping up expansion here. Taiwan’s United Microelectronics Corp opened its facility in Pasir Ris on April 1, while American giant Micron Technology is building an $8.9 billion plant to be opened in 2026.

The high level of trust in the strong ecosystem here makes the Singapore brand a compelling one, said Mr Tan, but the country must keep strengthening its competitive advantage in the face of global disruptors and emerging neighbouring countries.

The semiconductor sector contributes around 6 per cent of Singapore’s gross domestic product and is a crucial global player, accounting for 10 per cent of all chips produced worldwide.

A Frost and Sullivan report presented at the SSIA event identified a lack of advanced capabilities and regional competitors as threats to Singapore’s industry, while high labour costs and a heavy reliance on imported materials could make it unsustainable in the long term.

The impact of US tariffs on Singapore exports still looms over the semiconductor sector, with negotiations on the levies yet to commence.

Mr Tan noted that the Government is working towards a solution: “We are studying the impact of tariffs on the semiconductor industry closely, and taking the feedback from companies, SSIA and SME industry associations very carefully for our deliberations.”