Pore ​​can be a global semiconductor foundry center if we solve 2 challenges – Health Guild News


Semiconductor shortages are wreaking havoc around the world, disrupting the supply chains of various industries and revealing a politically sensitive global dependence on Taiwan-based foundries, mainly the flagship TSMC.

The country, which is not officially recognized by almost any other country, is responsible for more than 60% of the world’s chip supply, including those using some of the most advanced nodes of 7, 5 and 3 nm (increasing speed and reducing energy consumption and manufacturing costs).

The Covid-19 pandemic has only exacerbated the problems, as it has caused demand for certain industries (such as car manufacturing) to plummet, while others have skyrocketed (mainly consumer electronics for trapped people). at home for extended periods of time).

Today, as car manufacturers have increased production by 2021, there are simply not enough chips available for their vehicles. Toyota has just announced that, for this reason, it will have to reduce world production by 40% in September.

Cryptocurrencies have added their own fair share of pressure, as the rise in prices made mining very profitable, leading to huge inflation in chip demand and a lack of products (e.g. graphics cards).

Again, TSMC is the company that produces chips for all major brands like AMD and nVidia, as well as some for Intel itself. It simply cannot keep up with demand, while political turmoil stemming from worsening Sino-US relations (e.g., over Taiwan status) adds to the fear that any hostile movement of Beijing against the island could lead to a global economic disaster. .

However, every crisis is an opportunity, so manufacturers are scrambling to diversify their supply channels to cover their risks for the future. There are efforts to repatriate part of the production, that is, to return to the USA or Europe, as well as to look for alternatives in Taiwan in other countries.

TSMC may be headquartered in Taiwan, but its ownership is predominantly foreign and very diverse, so it is natural for many shareholders to expect the company to cover its risks and move some operations overseas.

This is where Singapore shines.

The small city-state is already a major manufacturer of electronic circuits and related products. In 2020, they accounted for almost half of its manufacturing exports. Thanks to its experience, skilled labor and favorable regulatory and fiscal environment, it has long attracted foreign companies.

In June this year, GlobalFoundries announced a US $ 4 billion investment at a semiconductor manufacturing plant in Singapore.

While this is certainly a good sign, it is still a drop, as GlobalFoundries (with factories in the US and Germany as well as Singapore) accounts for seven per cent of the global foundry market, while TSMC’s share is 56 percent.

Image credit: CNBC / TrendForce

How can Singapore try to catch up?

While it can’t get to the top spot in Taiwan on its own, it can certainly get a lot of cake, especially because global customers will want to significantly reduce dependence on a country whose future is so uncertain (and which is being threatened by Beijing regularly).

There will be a lot of business pending in the coming years and Singapore will be able to benefit from it if it can tackle two major hurdles.

1. Work

The first challenge is labor shortages.

While Singaporeans are well-educated, most choose not to graduate in STEM subjects – and the the proportion of STEM graduates in society is declining (according to data from the 2020 census).

Singapore 2020 census
Resident university graduates by field of study and sex / Image credit: Singapore 2020 Census
Singapore 2020 census
Composition of postgraduate graduates in Singapore’s labor force by gender / Image credit: Singapore 2020 Census

This is worrying because, even if Singapore can open its doors to immigrants to fill these vacancies, it is always safer for investors to rely on a steady supply of national labor that may not be restricted by law under political pressure.

Anti-immigrant sentiments, which appear in places in Singapore society, are a risk that is also valued by foreign investors.

In other words, more Singaporeans should graduate first in engineering subjects, especially those related to computer technologies.

Second, the country must ensure sufficiently open immigration policies to ensure access to sufficient talent to work in such specialized facilities.

Third, the public should recognize the value these policies bring to the future of the entire country, which could benefit from growing participation in one of the most crucial industries on the planet.

2. Water

The second big problem is the perennial city-state issue, but one that Singapore’s ingenuity has already addressed very well: access to water.

The importance it has even outside the City of Lion could be witnessed this year when it is persistent droughts in Taiwan threatened to reduce factory production, aggravating global supply problems.

This is because the production of chip wafers consumes huge amounts of water.

water use semiconductor
Image credit: PUB.gov.sg
recycling rates of water manufacturing plants
Image credit: PUB.gov.sg

Despite recycling (up to almost 70% of water in some cases), Singapore’s semiconductor industry is responsible for 11% of total consumption in the city.

If it wants to grow rapidly in the next decade or two, its demands could easily multiply and if Singapore cannot provide it, new facilities will simply not arrive.

Other than that, the city-state is easily one of the best locations for business, given its stability, predictability, favorable business climate, low taxes, lack of corruption and general security and national security.

As was the case in the recent case of Hong Kong outflow of financial services and wealthy residents in Singapore, after Beijing imposed stricter restrictions, eroding the city’s appeal; the same scenario may take place for Taiwanese manufacturing.

And, once again, Singapore is one of the best relocation destinations in Asia, alongside South Korea and Japan (where TSMC is already considering building another plant).

For the city-state, it is another rare opportunity to take advantage of it and outweigh its weight in another technology-critical sector globally.

If it can make the most of it, it will largely depend on Singaporeans, whether they see their future in computer engineering and the reception they will have from highly skilled workers who should come from other countries to provide enough depth to the big ones. investments in semiconductors will grow on the island.

Given the impact of electronic chips on our ability to produce almost anywhere in the world, Singapore is a remarkable opportunity to position itself in a privileged position in this market over the coming decades.

Featured Image Credit: NZ Herald

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