Preamble:
In view of the expected growth in market demand in the medium to long term, and to effectively diversify supply chain risks, a number of large chipmakers and their related suppliers are actively expanding their investments in Singapore and increasing chip production capacity.
This initiative aims to ensure the stability of the supply chain while meeting the growing demand for chip products.
Singapore's stability is valued under the fluctuation of the industrial chain
The U.S. and China are increasingly competing in the semiconductor space, while Singapore is less affected by geopolitical conflicts due to its relative geopolitical neutrality.
Against the backdrop of a tight and unstable global semiconductor supply chain, Singapore's semiconductor industry has demonstrated remarkable resilience and strong adaptability.
At present, the global semiconductor supply chain is undergoing reshaping, and major enterprises have implemented diversified layout strategies, and how to allocate production capacity efficiently and flexibly has become the focus of the industry.
In recent years, trade restrictions and frequent black swan events have brought new fluctuations to the otherwise stable semiconductor industry chain, and the global semiconductor supply chain is migrating.
According to media reports, after the United States raised tariffs on Chinese products, the global semiconductor supply chain pattern has accelerated adjustment, especially in the past two years, forming two major sectors: the Chinese supply chain and the supply chain outside China.
Due to the impact of tariffs, U.S. customers have transferred more orders from China, resulting in the world's advanced capacity utilization rate has increased to about 75% in the second half of the year, which is expected to provide solid capacity support for the new plant in Singapore.
According to the 2024-2027 regional capacity change estimate released by TrendForce, a global industry research institute, in June, the proportion of overseas production capacity of Taiwanese fabs is expected to increase in the next three years.
Among them, TSMC's capacity expansion will be mainly concentrated in the United States, Japan and Germany, and after the opening of the new VIS 12-inch factory, the proportion of Singapore's production capacity is expected to increase from 14% in 2024 to 24% in 2027.
Major chip manufacturers gather in Singapore
Recently, VIS and NXP Semiconductors jointly announced that they will establish VSMC as a joint venture in Singapore and start building a semiconductor wafer manufacturing facility using 12-inch technology, with an estimated total investment of up to US$7.8 billion.
After obtaining relevant regulatory approvals, the joint venture plans to officially start construction of a wafer fab in the second half of 2024, and is scheduled to achieve mass production in 2027 to provide customers with the first batch of chip products.
The fab is expected to produce 55,000 12-inch wafers per month by 2029.
The new fab will focus on the production of mixed-signal, power management and analog chips using proven 130nm to 40nm process technologies to meet the needs of the automotive, industrial, consumer and mobile end markets.
German wafer manufacturer Siltronic has officially opened a 2 billion euro semiconductor wafer factory in Singapore.
This is Siltronic's third and largest production base in Singapore, covering an area of 150,000 square meters, mainly producing 12-inch semiconductor wafers, and is expected to reach 100,000 pieces per month by the end of the year, with full capacity in the next few years.
Pall Corporation, a leader in filtration, separation, and purification technologies, celebrated the opening of its state-of-the-art manufacturing facility in Singapore.
The investment, which is approximately $150 million, will further strengthen Pall's capacity building to support the development of cutting-edge technologies and enable the adoption of new applications such as generative AI to meet the strong demand for advanced node semiconductor chips.
Foundry UMC held a ceremony for the third phase of its expansion project at Fab 12i, a major foundry in Singapore, with the first batch of equipment already in place.
Construction is expected to be completed by the end of the second quarter of this year and mass production is expected in early 2025, with the plant offering 22/28nm process technology.
There are several core reasons behind the popularity of large manufacturers
Singapore has built a semiconductor industry system covering the whole chain of chip design, manufacturing, packaging, testing, equipment, materials, and distribution.
The Singapore government has set a clear target to achieve a 50% increase in the output value of the semiconductor industry and related manufacturing industries by 2030.
To this end, many large chip companies are actively increasing investment and expanding production capacity in Singapore.
Singapore has a mature and large industrial ecosystem of supporting industries, research institutes and infrastructure, which provides unique conditions for semiconductor manufacturers.
In addition to chipmakers, Singapore also attracts companies from across the semiconductor ecosystem, including chip designers, manufacturers, packaging and test companies, and equipment suppliers.
This ecosystem is significant for semiconductor companies, as networks of similar companies foster collaboration and innovation.
Singapore's logistics system is efficient and convenient, and it is one of the global logistics centers, ensuring the smooth flow of chips around the world.
It is reported that 24 of the world's 25 largest logistics companies have operations in Singapore, and have established close logistics ties with customers in Taiwan, China, Japan and South Korea.
The Singapore government has played an important role in attracting semiconductor manufacturers, creating favorable conditions for long-term investment in the manufacturing sector by providing a stable and business-friendly environment.
In addition, Singapore has signed Double Taxation Agreements (DTAs) with more than 80 countries around the world, which avoids double taxation, reduces withholding tax, and provides a preferential tax regime that effectively reduces the tax burden on holding company structures.
At the same time, it will further attract investment by providing tax breaks, land support, and R&D support.
Its infrastructure underpins semiconductor manufacturing, and its robust intellectual property (IP) protection system ensures the security of innovation.
In addition to talent advantages and tax incentives, major manufacturers also value the key position of their sea and air logistics systems as a transportation hub in Southeast Asia, as well as the resilience of semiconductor supply chains.
In the event that other fabs in Asia may have their production lines damaged due to geography or natural disasters, the Singapore fab can play a backup role.
[Migration] became a major driver of the country's economic development
In 2021, Singapore committed US$8.77 billion in new investments in facilities, equipment and machinery.
Since then, a number of semiconductor companies have increased their investment in Singapore and set up semiconductor factories.
Behind this trend, there is a crucial factor, which is the continuous development of advanced process technology.
At present, chips with a process below 14nm, such as 7nm, 5nm, 4nm, 3nm, and 2nm, which are expected to be mass-produced, are manufactured with 12-inch wafers.
The reason for this choice is that as the complexity of the process increases, so does the cost of the chip.
In order to effectively control costs, maximizing the use of silicon wafers is key.
Since the larger the wafer size, the less material is wasted, so its utilization rate is also higher.
For example, when 8-inch and 12-inch wafers are used to produce chips on the same process, 12-inch wafers produce 2.385 times more chips than 8-inch wafers.
In addition, the cleanliness of 12-inch fabs is higher than that of 8-inch fabs.
Therefore, when the same chip product is transferred from an 8-inch production line to a 12-inch production line, its yield will be significantly improved, which will further increase the cost efficiency.
End:
At this stage, Singapore's role as a hub is becoming more pronounced, and this trend is expected to attract further industry giants, which will bring significant positive impact and valuable opportunities to Singapore's semiconductor industry, while injecting more vitality and innovation into the global semiconductor market.
Part of the information reference: Semiconductor Industry Observation: "Singapore Semiconductor, Lie to Win", Global Semiconductor Observation: "The $7.8 billion 12-inch wafer factory is about to start, Singapore is expected to become the next semiconductor town", AI Meow Economy: "TSMC Joint-stock Company VIS Joins Hands with NXP to Build a 300mm Chip Factory in Singapore", "Semiconductor Industry Vertical: "There Are More and More Advanced Wafer Fabs in Singapore"
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