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 land[2] 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 allocation[3] 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
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).
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