The Government and 10 industry partners are injecting $200 million over the next three to five years for research and development into the manufacture of smaller, more efficient semiconductors.
The R&D will be carried out in four joint labs set up by the Institute of Microelectronics (IME) and the 10 companies.
IME executive director Kwong Dim-Lee told The Straits Times yesterday that there is huge demand building for sensors and other devices designed to be always connected to the Internet.
"These devices are really tiny; some can be injected into the body. They are packed with electronics because they have many features. At the same time, they must use less power for longer periods and not give out a lot of heat," he said in an interview. "New tools and processes are needed to make these kinds of devices."
The firms - Applied Materials, Dai Nippon Printing, Disco Corporation, KLA-Tencor, Mentor Graphics, Nikon, Panasonic Factory Solutions Asia-Pacific, Pink, Tokyo Electron and Tokyo Ohka Kogyo - all have operations here.
They are involved in different parts of the semiconductor manufacturing process such as cutting, grinding and polishing of metals, making high purity chemicals, process control and inspection and producing equipment.
Each lab at IME in South Buona Vista will focus on different parts of the manufacturing process.
They have been set up on the back of IME's success with a similar collaboration with packaging firm Applied Materials in 2012.
Mr Russell Tham, Applied's regional president for South-east Asia, told The Straits Times that the lab accelerated the development of Ventura, a machine used by electronics companies such as Qualcomm to package chips for smartphones.
"Smartphones have a number of chips crammed into it, resulting in limitations of battery life and power. Ventura packaged the chips in a different way. We're the first in the world with this ground-breaking product," he said.
Applied has sold about 30 machines worth hundreds of millions of dollars.
Mr Dan Lee, KLA-Tencor's president for South-east Asia, said the joint labs will allow his firm to help local precision engineering, mechanical engineering and other related companies to improve their capability.
"Previously our research and development was done in the United States. We've no window into the process. Now with R&D being done here, we can influence the way technology is developed. We can then work with local companies to develop our products," he noted.
Prof Kwong said the labs are a crucial step to strengthening Singapore's electronics sector, a key pillar of the manufacturing industry. He noted that the industry, which includes the semiconductor and precision engineering sectors, have already moved into making components for smartphones, tablets and other gadgets.
Trade and Industry Ministry data show that semiconductors figure prominently in the electronics sector, with manufacturing output estimated at $46 billion last year. The first-quarter economic survey showed that output rose by 10 per cent on the back of good semiconductor demand.
Mr S. Iswaran, Minister in the Prime Minister's Office and Second Minister for Home Affairs and Trade and Industry, who officially opened the labs yesterday, highlighted the sector's importance.
He said the semiconductor industry plays a key role in the economy, providing jobs for 41,000 people while its value-added grew more than nine-fold from 1993 to reach $10.9 billion in 2013.
Rising affluence in Asia has led to growing demand for mobile devices such as smartphones and tablets, which will drive the production of more chips, he added.
Singapore has the second-largest semiconductor industry in the Asia-Pacific region, and makes one in 10 of the world's semiconductors.
This article was first published on July 24, 2014.
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