Western Chipmakers Increase Production in Singapore To Meet Growing Demand

Singapore is developing into a hub for chipmakers, and related suppliers as Western chipmakers seek to expand production in the city-state to meet rising demand and mitigate supply chain risks.

Soitec, a French manufacturer of substrates, and Applied Materials, a US semiconductor manufacturing equipment maker, are growing their production in Singapore to improve relations with Asian customers and anticipate potential growth, Nikkei Asia reports.

Chipmakers in Singapore Double Down on Investments

Soitec

Soitec is investing 400 million euros ($430 million) to double the production capacity of its wafer plant in Singapore, which produces silicon-on-insulator (SOI) wafers, according to the same report.

The expansion will double the plant's 300-millimeter SOI wafer capacity to 2 million units per year and add 45,000 square meters of floor space, including office space, to the plant.

The Straits Times reported in December that Soitec CEO Pierre Barnabe indicated that the project is a response to the high demand for 300mm silicon-on-insulator (SOI) wafers, which are utilized in 5G communication devices such as smartphones and electric vehicles.

This expansion is part of a €1.1 billion five-year program of capital expenditures, including increased production in Bernin, France. By 2026, the company intends to expand its global annual production capacity to approximately 4.5 million wafers.

The Business Times reported that Pierre Barnabe is optimistic about the company's outlook, stating that the current semiconductor slowdown is not impacting the key markets that Soitec's specialized, energy-efficient wafers serve.

He believes that as these products add more features and increase their technological capabilities, they will require more energy-efficient chips to power them; consequently, the demand for their wafers will remain stable.

Applied Materials

Applied Materials has begun construction on a new $600 million Singapore dollar ($450 million) facility in Tampines with a total floor space of 65,000 square meters, including office space.

The company will increase its Singapore workforce by approximately 40% to more than 3,500 employees. The new facility is integral to Applied Materials' eight-year expansion plan termed "Singapore 2030". It is aimed to meet the growing demand of its primary customers, including Taiwan Semiconductor Manufacturing Co. (TSMC).

"Applied Materials is a longstanding partner for Singapore in advancing manufacturing and innovation in our semiconductor equipment industry," Dr. Beh Swan Gin, Chairman of Singapore's Economic Development Board, said in a statement.

"We strongly welcome the company's 'Singapore 2030' plan, which will deepen Singapore's role as a critical node in the global semiconductor supply chain," the economic board chair added.

Singapore Improves Position in Chip Industry

Singapore is already home to Applied Materials' largest production facility outside the United States. The city-state offers efficient logistics that mesh well with Taiwan, South Korean, and Japanese customers.

Nikkei reports that 7% of Singapore's gross domestic product is attributed to the semiconductor industry. The government strives to draw in more chip-related companies by offering tax breaks, land, and research and development support.

Finally, due to its relatively neutral geopolitical stance, Singapore is less likely to be affected by any conflict between the United States and China. Its location in Southeast Asia also allows for supply-chain diversity.