Slide in electronics exports temporary, says EDB

SINGAPORE - Despite the recent poor export performance, the Singapore electronics industry, which accounts for 5 per cent of GDP (gross domestic product) and provides for about 80,000 jobs, has sufficient resilience to adapt to the fast changing nature of the industry, according to the Singapore Economic Development Board (EDB).

In March the electronic NODX (non-oil domestic exports) fell by 17.9 per cent on a year-on-year basis. This came on top of a 27.4 per cent fall in February.

The electronics cluster contributes around 27 per cent in the Republic's manufacturing output and 25 per cent of manufacturing value add. It is a vital cog in the country's economy. In 2012, the electronics industry's FAI (fixed asset investment) contribution to the economy was S$6.2 billion, the second largest after energy and chemicals.

Between 2009 and 2012 the electronics industry contributed the largest share of EDB's FAI commitments, accounting for more than S$24.3 billion worth of investments.

FAI represents a company's long-term investment in Singapore, and is a forward indicator of the vibrancy of the industry. Singapore is the second largest city-state in terms of chip production.

Speaking to The Business Times, EDB's director of electronics, Terence Gan, notes that the electronics industry is fast-changing with new technologies and applications developed overnight impacting the industry in a big way. "While we cannot change the cyclical nature of the industry, but by diversifying ourselves into different sub-sectors, we can improve the stability of the sector's performance," he said.

"We believe that the current downturn is temporary, and primarily a result of global and local trends, as our electronics industry has not reduced its electronics manufacturing capacity."

Both media as well as analysts' reports have blamed the relative poor performance of the Republic's electronics exports - for about a year now - on global demand shifting away from personal computers to mobile devices and that Singapore is not as cued into the mobile device supply chain as it is into the global PC components supply chain.

Responding to this point, Mr Gan says: "When the first iPhone came to market in 2007 there were only a few suppliers for some key components such as ultra-thin touchscreens, thin batteries, compact cameras and certain ICs, and as a result, these companies were able to clinch exclusive manufacturing rights. However, by last year, the number of suppliers have increased both in numbers and their distribution around the world. The supply chain dynamics for smartphones and tablets is or will not be much different from that of the PC industry."

Singapore's electronics industry is already keyed into the high-growth smartphone and tablets supply chain, he adds. "About 30 per cent of our semiconductor industry's manufacturing output is for the communications and mobile devices market. A good number of companies in Singapore design and manufacture the key components that go into these mobile devices.

"These include high resolution displays, LED camera flashes, CMOS image sensors, lithium ion batteries, MEMS (micro-electronic mechanical systems) sensors, NAND flash memories, and various other electronic chips."

The biggest fall in electronics exports have been in devices that are mostly PC components. However, these contribute only about 10 per cent of Singapore's total electronics output. "Our semiconductor industry is well diversified across many end markets, such as communications, computing, consumer electronics, automotive and industrial," Mr Gan said.

Moving forward, EDB is focusing on attracting high-value investments that can bring the electronics industry to a higher technological capability, and create more meaningful jobs for a skilled workforce.

To this end, it is developing capabilities in various key growth segments of the industry, including communications (mobile devices, smart phones). This prepares our workforce to take on new technologies, as "we continually equip employees with the relevant skill sets to keep Singapore globally competitive", he adds.

Mr Gan notes that STATS ChipPAC and GlobalFoundries announced last year that they would expand their advanced chip packaging and wafer fabrication plants respectively in Singapore. "This is testament to the fact that companies continue to value our skilled workforce, infrastructure, political stability and quality of life as they operate here."

Singapore electronics industry manufactures and designs components for a wide spectrum of industrial, computing, consumer, automotive as well as communications products.

From diversifying ourselves into these sectors, "we are now leveraging these strengths to seize the multiple growth opportunities in an increasingly connected, or 'electronified', world", he adds.

"For example the VIRTUS Integrated Circuit (IC) Design Centre of Excellence was set up in 2009 to nurture IC design talent in a variety of focus areas, such as from Radio Frequency and Millimetre Wave, to power management.

"We are also making good progress in MEMS sensors - A*Star Institute of Microelectronics has established an advanced 200 mm wafer fabrication and advanced packaging lab to partner companies in developing MEMS sensors from a concept to a final product; GlobalFoundries aims to be a leader in MEMS high volume manufacturing and its MEMS capabilities are based primarily in its Fab 3E in Tampines. This will help establish capabilities not just in the communications sector, but also in power management and automotive applications."

Other than semiconductors, Singapore is also a leading player in the data storage industry. More than 40 per cent of the world's hard disk media is made in Singapore, storing data in traditional computers, ultrathin notebooks, tablets and even in data centres.

Singapore's electronics industry has a long heritage, and "today in particular we are recognised for being a global semiconductor leader. Over the years we have achieved global leadership in the industry: more than half of the top semiconductor IDMs and fabless semiconductor companies have substantial activities in Singapore, and besides producing 10 per cent of the world's ICs, today we are attracting more companies to carry out upstream IC design and R&D (research and development) activities here", Mr Gan says.

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