 "How ‘small’ Singapore, a semiconductor powerhouse, can aid India’s chip ambitions")
On Thursday, Prime Minister Narendra Modi visited a semiconductor company in Singapore.
Modi, who is on a two-day trip to the city-state, was accompanied by his Singapore counterpart Lawrence Wong.
Modi made the trip at Wong’s invitation.
This came on the same day that India and Singapore signed a memorandum of understanding to deepen cooperation in several fields including semiconductors.
India has been seeking to join the ranks of countries that make semiconductors.
But how is small Singapore such a semiconductor powerhouse? How it can help India’s plans?
Let’s take a closer look:
A semiconductor powerhouse
Singapore entered the semiconductor race early.
As per Tech in Asia, Singapore in 1986 became just the second nation to join the industry.
It all began on the premises of the Singapore Institute of Standards and Industrial Research (SISIR).
Philip Yeo, who was part of the Singapore Administrative Service and founding chairman of the National Computer Board, played a crucial role in the country’s promotion and development of semiconductors.
Investment agencies such as Temasek and EDB/I also played a part.
Singapore established its first Electronic Packaging Research Consortium in 1996.
As per CNBC, Singapore today puts out around 10 per cent of the world’s semiconductors.
It has five per cent of the world’s fabrication capacity and 20 per cent of the equipment production.
Nine of the top 15 semiconductor manufacturers including Qualcomm, AMD, Applied Materials, Global Foundries, and Micron have a presence in Singapore.
Impact Shorts
More ShortsAs per EDB, around 35,000 people work in Singapore’s semiconductor sector.
In its 2024 budget, it announced that it would spend around $21.5 billion over five years towards research and development.
According to Semi.org, Singapore 89 new semiconductor fabs or foundries have already sprung up since 2022.
A total of 109 fabs are expected to become fully functional by 2026.
Singapore makes around 17 per cent of the chips used in the United States, as per Medium.
What makes this feat all the more impressive is that the city state has under 0.1% of the world’s population and less than 0.001% of the world’s land resources.
NXP Semiconductors and Vanguard International Semiconductor Corporation in June unveiled plans to build a $7.8 billion factory in the city-state.
This follows fresh investments from GlobalFoundries, Micron Technology and others showcasing Singapore’s expertise in the industry.
While Taiwan dominates high-end chip-manufacturing, Singapore has carved out a slice of the global tech supply chain making low-end chips vital to electric cars, smartphones and more.
Its highly-productive workforce, well-developed research and manufacturing infrastructure, and sophisticated logistics have helped boost semiconductor manufacturing to seven per cent of GDP. The government also supports the industry through friendly policies and tax breaks.
The city has emerged as the largest production hub outside the United States for US-based firms including Applied Materials and Micron.
All of which makes Singapore a logical choice for NXP and Vanguard’s joint venture.
The new factory will produce 130 nanometer to 40 nm chips using technology TSMC developed some two decades ago.
It’s a commoditised market where profit margins and returns are generally low.
How can Singapore be of help India’s plans?
India has announced its plans to become a chip-making powerhouse.
Though India is pulling out all the stops to woo foreign chipmakers including subsidies, it is playing catch-up to Taiwan and China and thus needs all the help it can get.
New Delhi can use its existing relationship with Singapore – which after all is its largest trading partner in the ASEAN and from which it gets maximum FDI – to draw investment.
The MOU on Semiconductor Ecosystem Partnership signed today is a step towards that.
Prime Minister Modi also invited the Singaporean semiconductor companies to participate in the SEMICON INDIA exhibition to be held in Greater Noida on September 11 to 13, 2024.
Moneycontrol quoted Singapore’s Foreign Minister Vivian Balakrishnan as saying that advanced manufacturing, semiconductors, aviation and maritime connectivity are going to be the new areas of collaboration and offer ‘significant’ opportunity for both nations.
As per News24, though Singapore has a sophisticated semiconductor industry, its tiny size limits its growth potential.
“Its universities offer specialised programs in microelectronics, IC design, and semiconductor engineering. They can help Indian educational institutions in developing similar programmes that cater to the growing needs of India’s semiconductor industry,” the piece noted.
It added that Singapore-based firms can also use India as a base for assembly and testing as it would be a far cheaper option.
“In return, New Delhi can get the benefit of advanced technologies and processes developed in Singapore, augmenting its semiconductor manufacturing capabilities,” the piece contended.
The piece added that Singapore can be of assistance in setting up Wafer Fab Parks – which are designed to manufacture semiconductors.
“These Fab Parks can be equipped with state-of-the-art infrastructure and tailored services to attract top global semiconductor companies,” the piece noted.
“Singapore is five years ahead of us. (Semicon) packaging is a low hanging opportunity for us. At the moment, Malaysia is packaging all sorts of chips, but how much can they expand? We have good English speaking talent, good tech talent, and the government rolling out a red carpet. Singapore is the Asia Pacific headquarter for global MNCs who would want to tap into India. Lots of semicon ecosystem companies have offices and operations there, including equipment companies for semi fabs,” Neil Shah of Counterpoint Research told Moneycontrol.
“Singapore has limitations in land and labour, while India has abundant land and skilled labour. This makes India a valuable part of Singapore’s semiconductor value chain. Semiconductor companies in Singapore can be encouraged to consider India for their expansion plans,” an official told CNBC.
Prime Minister Narendra Modi in March laid foundation stones of three semiconductor fabrication plants being built at a cost of Rs 1.25 lakh crore.
The plants, together with Micron’s under-construction unit in Sanand, Gujarat, will help cut India’s dependence on countries like Vietnam.
Modi said only a handful of nations are manufacturing semiconductors today, and emphasised the need for a reliable supply chain after the disruptions caused by the pandemic.
India, he said, is keen to play a crucial role in this and highlighted the country’s tech space, nuclear, and digital power.
Elaborating on the future plans where India is primed to take on commercial production for the semiconductor sector, he said, “The day is not far when India will become a global power in the manufacture of products for the semiconductor sector.”
The projects for which foundation was laid included Tata Group’s Rs 91,000 crore plant at Dholera to make 50,000 wafers per month and another Rs 27,000 crore unit in Morigaon, Assam, as well as a Rs 7,600 crore facility of Murugappa Group’s CG Power at Sanand, Gujarat.
According to Communications and IT Minister Ashwini Vaishnaw, semiconductors will start rolling out from Tata Electronics’ plant in December 2026. Micron will start producing chips by December 2024.
The units which will make chips for sectors, including defence, automobiles and telecommunications.
Referring to his government’s commitment to make the country a semiconductor manufacturing hub, he said when India commits, it delivers, and added that chip manufacturing opens the door of development with infinite possibilities.
“Two years ago, we declared a Semiconductor Mission and announced that we would take initiatives. Within a few months, we signed MoUs and today we are laying the foundation stones for three projects. India commits, India delivers and democracy delivers,” he said.
India is already decades behind in semiconductor manufacturing, but will not lose a single moment any longer, he said.
“For the first time, India dreamt of semiconductor manufacturing in the 1960s. But even after this, the then governments did not take advantage of those opportunities. The biggest reasons behind this were lack of willpower, lack of effort to convert our pledge into achievement, and lack of capacity to take far-sighted decisions for the country,” he added.
“People who were in those governments said there was no need to hurry as this is a future need. Hiding behind India’s poverty, they kept ignoring all such investments of modern needs. They would commit corruption worth thousands of crores of rupees, but would not invest in semiconductor manufacturing,” he said.
No country can develop with such thinking, he said.
“Therefore, our government is working with forward-looking thinking and a futuristic approach. Today, we are moving ahead with the ambitions of competing with developed countries in the semiconductor sector,” he said.
“Only a few countries in the world are manufacturing semiconductors, and Covid-19 has given us a lesson to have a reliable and resilient supply chain. India is eager to play a very big role in this direction,” Modi said.
He said the country has always been a space, nuclear and digital power.
“In the coming time, we will begin commercial production of semiconductor products. Days are not far when India becomes a global power in this field as well,” he said.
“The 21st century is a technology-driven century, and we cannot imagine it at all without an electronic chip. Made in India and Design in India chip will create a big capability to take India towards self-reliance,” he said.
Tata Electronics Pvt Ltd will set up a semiconductor fab in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corp at Dholera while Tata Semiconductor Assembly and Test Pvt Ltd (TSAT) will set up a chip unit in Morigaon, Assam.
CG Power, in partnership with Renesas Electronics Corp and Stars Microelectronics of Thailand, will set up a unit in Sanand.
Tata Electronics plant will cater to multiple sectors — power management chips for electric vehicles, telecom, defence, automotive, consumer electronics, display, and power electronics.
The Assam facility, India’s first semiconductor unit in the Northeast, will develop indigenous advanced semiconductor packaging technologies, including flip chip and ISIP (integrated system in package) technologies, with a capacity of 48 million chips per day.
The target segments for these would be automotive, EVs, consumer electronics, telecom, and mobile phones, among others.
Renesas is a leading semiconductor company focussed on specialised chips. It operates 12 semiconductor facilities and is an important player in microcontrollers, analogue, power, and system-on-chip products.
Its joint venture plant with CG Power will have a capacity for 15 million chips per day, and will manufacture chips for consumer, industrial, automotive and power applications.
Vaishnaw said efforts were being made to set up a semiconductor industry in India since 1962 but it has become successful now.
He said foundation of three large semiconductor projects is a record in the world.
“The ground-breaking ceremony has been done within 15 days of the project approval by the Centre. India will be among top five semiconductor ecosystems by 2029,” Vaishnaw said.
Tata Sons Chairman N Chandrasekaran said the Tata Electronics’ semiconductor projects will initially create 50,000 direct and indirect jobs.
He said the production at Assam plant is expected to start before the fabrication unit’s production in Dholera.
With inputs from agencies
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