SINGAPORE will still be a hotspot for the semiconductor industry, Deputy Prime Minister Heng Swee Keat has said - in spite of a chipmaking decline that saw the economy grind to a halt in the second quarter.
Noting that new technologies such as artificial intelligence, the Internet of Things and 5G bode well for chip demand, Mr Heng, who is also the finance minister, said that "Singapore is well positioned to meet the rise in long-term global demand" for semiconductor chips.
He was speaking on Wednesday at the opening of American semiconductor giant Micron Technology’s wafer fab expansion in the north of Singapore.
"While the global demand for semiconductors has weakened this year, we must continue to invest for the longer term and strengthen our ecosystem," said Mr Heng. "This way, we will be ready to harness new opportunities when the global demand picks up."
He cited the electronics industry transformation plan launched in 2017, as well as closer ties among chipmakers, suppliers and research institutes.
These sentiments came as a global downturn in the semiconductor industry, coupled with trade tensions involving key markets, tanked the Republic’s manufacturing sector and prompted another full-year growth downgrade on Tuesday.
Singapore manufacturing is likely to post a full-year decline, Yong Yik Wei, director of the economics division at the Ministry of Trade and Industry, had told a briefing on Tuesday.
The sector shrank by 3.1 per cent year on year in the second quarter, largely on contractions in both precision engineering and the semiconductor-led electronics cluster.
But Mr Heng said the downturn in global semiconductor demand should be viewed in the context of the "semiconductor super cycle" in the years before, and pointed to industry forecasts for a return to growth in 2020.
He called the launch of Micron's expanded facility "a good opportunity to reflect on the sustained long-term global growth in demand for semiconductors, how Singapore is well positioned to harness these growth opportunities, and how in doing so we can create more good jobs for our people and strengthen our partnership with our partners from all over the world".
Beh Swan Gin, chairman of the Economic Development Board, also said in a statement that the latest investment "demonstrates confidence in Singapore and in the long-term prospects of the semiconductor industry".
Meanwhile, Micron chief executive Sanjay Mehrotra said: "We look forward to continued collaboration, innovation and success with local suppliers, universities and government entities in Singapore whose strong partnerships have made this expansion possible."
The company has given the National University of Singapore S$101,000 to encourage science, technology, engineering and mathematics studies, and also gave the Nanyang Technological University some S$50,000.
Micron broke ground in April last year on expansion of its fabrication facilities, a “multibillion-dollar investment” in cleanroom space for its 3D NAND flash memory products.
The expanded facility will be used to deploy advanced manufacturing technology, with output to begin by year end, but is not expected to add any new wafer capacity.
Micron - which has told investors that it is pulling back on capex - "will align spending on capital equipment with trends in market demand", the company added in a statement.
The investment was touted as creating 1,000 new jobs, with chief business officer Sumit Sadana telling The Business Times earlier this year that 600 offers had been made. Micron now employs more than one-fifth of Singapore's 35,000-strong semiconductor industry workforce.
Micron has three facilities in Singapore, which makes most of the company's NAND products across the global portfolio. Its NAND Centre of Excellence includes flash memory operations here, and assembly and test sites on both sides of the Causeway, with work under way for a solid-state drive plant in Penang.
Still, Micron’s revenue most lately fell by 38.6 per cent year on year, to US$$4.79 billion, for the third quarter to May 30, while earnings plunged by 78 per cent, to US$840 million.
Mr Mehrotra said at a press briefing that 2019 was "somewhat of a challenging year in terms of industry demand-supply environment", but added that "long-term trends of industry demand continue to be very strong... so we are excited about the opportunities ahead".
With revenue from Chinese tech giant Huawei making up 13 per cent of Micron's sales for the year to date, Mr Mehrotra was asked about the impact of ongoing global trade disputes on Micron's business, including export curbs to Huawei imposed in May by the United States.
Micron previously told investors that it had suspended and reviewed its shipments to Huawei. Although exports of some products have resumed, "there is considerable ongoing uncertainty surrounding the Huawei situation, and we are unable to predict the volumes or time periods over which we'll be able to ship products to Huawei", the company said in June.
Mr Mehrotra has now said: "We certainly hope that US-China trade relations and the issues will get resolved, so that some of the headwinds that the industry faces, in terms of aspects of participating in the China market... do not disrupt industry operations or performance."
He added that "we know as much as you do" about a separate spat between Japan and South Korea: "We of course continue to watch the trends, and at this point, we do not want to speculate on what does it mean for our industry, because the actions are not clear."