Industry Articles

Bright Prospects for Electronics

1335_1Electronic devices have become so much a part of our daily lives that we cannot imagine life without our mobile phone, computer, vacuum cleaner, fitness tracker, etc. With 5G, the fifth-generation wireless standard, our lives are about to get even better.

With its vastly improved Internet speed, coverage and latency of wireless networks, 5G will serve as a springboard for accelerated innovation and reshape the mobile industry and beyond. At the Mobile World Congress 2019 in Barcelona, we were given a glimpse of the future. There were 5G cars, 5G smartphones, 5G firefighting drones, and even 5G fish-farming systems.

As the electronic industry evolves, it is improving our lives as well as our livelihood.

Since the first assembly and test facility was established by National Semiconductor in 1968, Singapore’s electronics industry has grown in sync with the global industry. Today, there are over 2,900 companies in Singapore’s electronics ecosystem encompassing the entire value chain, from manufacturing and distribution to research and development (R&D). Practically every electronic device in the world today has at least one component that is made or designed in Singapore.

It is the biggest sector in Singapore’s manufacturing, generating S$121.4 billion in manufacturing output in 2018, accounting for 36% of manufacturing gross domestic product.

Undaunted by near-term concerns, industry players are continuing to ramp up their presence in Singapore. Electronics fixed asset investment (FAI) amounted to S$3.08 billion in 2018, accounting for 58% of manufacturing industry’s FAI and 28% of Singapore’s total FAI.

The Economic Development Board (EDB) has identified several new growth areas, including green electronics, bio-electronics, plastic electronics, blockchain technology and security. Over the next three to five years, they are expected to account for 30% of Singapore’s electronics output.

As Singapore is looking to increase the value of its electronics manufacturing, it is investing substantial resources to build up advanced manufacturing capabilities to add competitive edge to the electronics value chain. Otherwise known as Industry 4.0, this ‘fourth industrial evolution’ marks the beginning of a journey that will enable local players to offer transformative manufacturing services.

MAJOR INDUSTRY SECTORS

• Semiconductors
Singapore has an enduring relationship with the semiconductor industry going back to 1968 when National Semiconductor set up its first test facility. From this modest beginning, it is now the biggest sector in Singapore’s electronics cluster, with diverse activities extending across the value chain, including integrated circuit (IC) design, wafer fabrication, assembly and tests, and manufacturing of equipment and substrate. The world’s top three wafer foundry companies, top three sub-contract assembly-and-test companies, and top four fabless IC design companies all have facilities in Singapore.

Singapore’s semiconductor manufacturing output more than doubled in five years to over S$100 billion in 2018 on the back of robust global demand from the server, personal computer, industrial and automotive markets, accounting for 76% of the electronics industry’s output. Between 2008 and 2018, the industry grew at a compound annual growth rate (CAGR) of over 8%, increasing its share of Singapore’s manufacturing output from 15% to 28% respectively over the period.

In spite of immediate challenges, the longer term outlook for semiconductors is bright. Chips are becoming increasingly ubiquitous. Not only are they found in the usual suspects like the computers and mobile phones, they are increasingly being embedded in lamp posts, postal boxes and refrigerators intelligence to things to inanimate devices, enabling them to communicate with each other.

In 2018, global sales of semiconductors, including integrated circuits, optoelectronics, sensors and discrete, rose 10% to reach a record high to surpass the one trillion unit mark for the first time. In a statement, John Neuffer, Semiconductor Industry Association (SIA) president and chief executive, wrote, “Global demand for semiconductors reached a new high in 2018, with annual sales hitting a high-water mark and total units shipped topping 1 trillion for the first time. Market growth slowed during the second half of 2018, but the long-term outlook remains strong.”

For 2019, a further 7% increase is expected. If the forecast growth is achieved, the industry would have an enviable CAGR of 9.1%, from 32.6 billion units in 1978 to 1,142.6 billion in 2019.

Companies are gearing up for the future by expanding their footprint in Singapore. At Micron, a new cleanroom space is being built adjacent to its existing manufacturing facilities at North Coast Drive. The additional cleanroom space will enable the company to successfully implement advanced 3D NAND technology node transitions. As part of its expansion, Micron will also be broadening its R&D capabilities.

Sanjay Mehrotra, president and chief executive of Micron Technology, said, “Over the past 20 years, Micron has invested more than US$15 billion in Singapore. The 3D NAND flash we create here is at the leading edge of all flash today – and it is a highly complex semiconductor to build. Our flash has 64 layers of data cells and is manufactured through many, many precision process steps.”

Singapore is host to three Micron wafer fabrication facilities and one assembly and test facility. It is also Micron’s designated NAND Centre of Excellence, driving the implementation of the company’s leading-edge 3D NAND production for use in mobile phones, solid state drives, digital cameras and more.

Systems on Silicon Manufacturing Company (SSMC) opened its S$300 million Annex 10 clean room in September 2018. Connected to SSMC’s existing Pasir Ris factory via a link bridge, the new 4,400-square-metre facility will enable SSMC to raise its production of automotive wafers from 26% of the company’s capacity to 40%; and possibly up to 60% by 2023.

This supports SSMC’s strategic direction of moving further into the automotive and high-performance mixed signal segments, producing chip sets for car infotainment, in-vehicle networks, vehicle-to-vehicle and vehicle-to-infrastructure communications, secure car access, as well as authentication control and sensors.

Since its establishment two decades ago as a joint venture by NXP Semiconductors and Taiwan Semiconductor Manufacturing Company, SSMC has recorded an accumulative capital expenditure of over S$3 billion.

Speaking at the opening of Annex 10, the EDB’s deputy director for semiconductors Ling Yuan Chun said: “SSMC has been an important player in Singapore’s semiconductor ecosystem since its inception. This expansion reflects the company’s long-term commitment to undertake high-value manufacturing for growth applications such as automotive and security in Singapore.”

• Electronics Manufacturing Services
The electronics manufacturing services (EMS) market is powering ahead. Increasing demand for automotive and consumer electronics, proliferation of mobile devices and increasing focus on core competencies are fostering growth. The demand for green and energy-efficient devices and components is further fuelling requirements for EMS.

In its new research report Global Market Insights noted, “OEMs (original equipment manufacturers) are developing strategic partnerships with the service providers that aid them in controlling manufacturing costs. The service providers offer product design, development, and manufacturing operations according to the demand from OEMs. Due to these facilities, OEMs achieve appropriate product supplies and save major development costs. This trend allows the EMS market players to develop green manufacturing facilities and energy-efficient products that support the global sustainable goals.”

Global Market Insights forecasts that the EMS market will be worth USS$650 billion by 2024.
As EMS is an integral part of Infocomms and Consumer Electronics (ICE), the second largest segment in the electronics cluster after semiconductors, Singapore will reap the benefits of EMS’ market expansion. Singapore is the regional base for many companies in the EMS fields, including four of the world’s top five providers.

• Data Storage
Spiralling global demand for data storage and disruptive technologies such as artificial intelligence (AI), big data and connectivity between devices and systems are paving the way to create value from data capital. Market research consulting firm IndustryARC estimates that between 2018 and 2023, demand for data storage will grow at a CAGR of 23%.

A 2018 IDC Asia Pacific survey of executives from large enterprises that included Singapore shows that 40% of local businesses plan to store their data for five to seven years, while 15% plan to store their data forever. Commissioned by Hitachi Vantara, the survey reveals that manufacturers face added pressure to provide storage solutions that are required to manage tremendous amounts of data.

Singapore has an enduring interest in the data storage industry. In the 1980s to 1990s, Singapore was a hard disk drive (HDD) hub, as the Data Storage Institute worked with industry leaders to continuously improve HDD storage capacity and performance. At its peak, Singapore accounted for half of HDDs made globally and eight out of 10 high-end enterprise drives.

With the change in cost structure and increasing regional competition, many key players have shifted their operations in Singapore to concentrate on capital- and knowledge-intensive activities.

With the explosive growth and complexity of big data, Edwin Yuan, an analyst at Enterprise Strategy Group told TechTarget that AI and machine learning will take on a greater role in managing data storage products and will autonomously make decisions without requiring approval from administrators to optimise data storage.

• Power Electronics
The lowly battery has not only survived into the modern digital age; it powers it, all the electronic devices used for communication, wearables and mobility. With fluctuating wind and solar power batteries are becoming vital with renewable energies and power grid support.

While lead-acid based batteries will continue to be utilised in traditional applications, lithium-ion-based battery technology will become the dominant solution for mobile as well as stationary energy storage applications. With the exponential growth of the energy storage industry and markets, there is increasing demand for testing – not only to support national and international certification requirements, but also to support industry development and innovation efforts and to increase safety.

Singapore is working closely with industry leaders and investing resources to build competency in battery research and knowledge sharing. In 2017, the Global Energy Storage Competence Cluster – a global initiative for energy storage – was launched in Singapore. The following year, the Agency for Science, Technology and Research (A*Star) signed an agreement with Canadian renewable energy company Hydro-Quebec for a US$20 million joint laboratory. It will conduct research and develop alternatives to lithium batteries, capitalising on nanotechnologies to power electric vehicles and for energy storage.

Singapore has a longstanding partnership with Energizer, one of the most established names in batteries, dating back to 1946. Today, the city state is home to Energizer’s largest plant internationally and is its only facility to produce lithium batteries. In May 2018, the US company opened additional battery production lines at its Singapore facility. It is one of only two locations globally to host the company’s proprietary technology with an installed capacity of 2.2 million cells.

Singapore is also home to New Resources Technology (NRT), a cleantech startup which specialises in designing and manufacturing lithium battery systems for automotive and energy storage systems. The home-grown lithium battery company secured nearly S$53 million investment in 2018 from Banpu, a Thai company in the solar energy field, which enables it to further expand its manufacturing capabilities, increase its capacity and pursue its global growth plans. The proposed expansion is expected to bring sales revenue of S$130 million by 2019 to NRT’s overall business.

1335_2

1335_3