Commentary

Singapore rides on the semiconductor growth wave

Industrial property owners could capitalise on the growing demand from the semiconductor sector.

October 07, 2024

Singapore's industrial landscape is witnessing a significant shift as the country prepares to tap into the global demand for semiconductors.

Since 2021, several major semiconductor players, including United Microelectronics Corporation (UMC), Siltronic, Soitec, Ardentec, Vanguard International and NXP Semiconductor, have opened or announced plans to expand or establish new facilities in Singapore.

This surge in investments was sparked by the global chip shortage during the COVID-19 pandemic. The emphasis on building supply chain resiliency amid elevated geopolitical and global supply chain disruption risks further drove this trend. Rising demand for electric vehicles (EVs), solar panel production, and artificial intelligence (AI) applications have further fuelled this growth.

The surge in investments from global players has also bolstered the growth of small and medium-sized enterprises (SMEs) that provide many services and products to these larger chip manufacturers.

Singapore’s semiconductor ecosystem spans the entire value chain, including research and development (R&D), manufacturing activities, wafer fabrication (fab), assembly, packaging and testing. Currently, the semiconductor industry in Singapore contributes approximately 5% of global wafer fab capacity, 20% of global semiconductor equipment output, and over 10% of global semiconductor output.1

Tapping future growth opportunities

The prospects for the semiconductor industry look promising. According to McKinsey & Company, the global market for semiconductors is projected to reach USD 1 trillion by 2030, up from USD 600 billion in 2021. Growth industries such as AI, EVs, and new technological advancements are expected to increase demand for chips.

Singapore is not resting on its laurels and has intensified efforts to capitalise on this growth opportunity.

JTC Corporation is increasing its prepared industrial land2 supply for wafer fabs by over 10% in 2024, equivalent to an additional 30 hectares, bringing the island-wide total to around 300 hectares. This will be the largest annual increase in prepared land supply in a decade. This optimism is supported by a strong direct allocation3 of land to businesses in the wafer fab parks, rising from 55-56% in 2018-2020 to above 70% since 2021.

Additionally, the government is investing in talent development (e.g. integrated circuit designers) to support the industry’s future growth needs. New R&D initiatives are also being launched to develop the sector’s capabilities. For example, in September 2024, the Agency for Science, Technology and Research (A*STAR) and Applied Materials jointly launched a new lab for developing innovative, cost-effective solutions for Singapore’s chip ecosystem.

We are confident that Singapore, with its strong government support, ready talent pool, business-friendly policies, and continual commitment to high value-adding R&D and manufacturing activities, will remain an attractive destination for global semiconductor players.

A strong local pool of semiconductor firms will also enable Singapore to strengthen its standing as an advanced manufacturing hub for activities such as robotics and automation.

Industrial property owners could capitalise on this potential demand growth, including the provision of higher specification spaces, for various activities such as R&D set-ups, production space, testing, assembly, and logistics in both the semiconductor and broader manufacturing sector.

Table 1: Examples of recent investments by semiconductor players in Singapore

Company Brief Description Location
Ardentec Singapore The semiconductor test services provider broke ground for a new test facility in December 2022. Fab2 will provide test services for semiconductor chips used in high-end computing, 5G communications, and automotive applications. When ready in 2024, the facility will also host new capabilities in test development and R&D. Woodlands Industrial Park
GlobalFoundries The semiconductor manufacturer opened its new wafer fab plant (expansion) in 2023. The new facility will produce an additional 450,000 wafers (300mm) annually and is capable of manufacturing 28-nanometre specialty semiconductors for future smartphones and EVs. Woodlands Wafer Fab Park
Siltronic The German silicon-wafer manufacturer doubled its chip manufacturing footprint in Singapore with the launch of its third wafer fab plant in June 2024. Tampines Wafer Fab Park
Soitec Soitec broke ground for its wafer fab extension at the end of 2022. It will be dedicated to producing 300mm SOI wafers used in chips for smartphones, particularly in 56 communications, as well as vehicles and smart devices. When completed in 2024, the extension will add 45,000 sqm of clean room and office space and double Soitec's annual production capacity in Singapore to around two million 300mm SOl wafers. Soitec is also expanding its technology presence in Singapore with the operational start of its Characterisation Lab within its Singapore Technology Centre. Pasir Ris Wafer Fab Park
Toppan Holdings Japanese manufacturer Toppan Holdings broke ground for a semiconductor packaging materials plant in Jurong on 14 March 2024. This is the first such plant in Singapore and the firm's first investment outside Japan to produce these substrates. The new factory will make substrates used in semiconductor products such as network switches, Al and machine-learning devices. It is expected to begin operations at the end of 2026. Pesawat Drive, Jurong
United Microelectronics Corporation (UMC) In 2022, the global semiconductor foundry announced the construction of a new advanced manufacturing facility. Located next to its existing 300mm fab in Pasir Ris, the facility is expected to be completed in 2024. Pasir Ris Wafer Fab Park
Vanguard International & NXP Semiconductors In June 2024, NXP Semiconductors and TSMC-backed Vanguard announced a joint venture to produce silicon wafers. Construction of the plant is expected to begin in the second half of 2024, with initial production available to customers in 2027. Tampines Wafer Fab Park

Source: Media sources, JLL Research, September 2024

1 Source: The Business Times, “Is Singapore losing out on the AI chip boom?”, published 16 July 2024
2 JTC land that is normally provided with road access/ frontage, main storm drain, water and sewer mains at its perimeter.
3 JTC allocates land directly to companies which satisfy investment criteria (e.g. fixed assets investments). Successful land lessees will have to adhere to JTC’s policies thereafter (e.g. anchor tenant rule and lease assignment restrictions).