Singapore has a well-deserved reputation as a global electronics powerhouse. For decades, our small but spunky nation has punched above its weight, attracting leading multinational corporations (MNCs) like Intel, Bosch, and Siemens onto our shores – fostering a vibrant ecosystem for design, manufacturing, as well as research and development (R&D) within the electronics industry.
From producing semiconductors to housing cutting-edge research labs focused on next-generation materials, Singapore's electronics sector has been a cornerstone of our economic success story, contributing to 8% of our nation’s gross domestic product (GDP). A closer look reveals that electronics is also the largest cluster within our nation’s manufacturing sector, accounting for 46.9% of the sector’s nominal value-added (VA) and 9.7% of Singapore’s overall nominal VA in 2022.
Looking forward, this trajectory is set to continue on a positive trend.
Our industry’s success has not come without challenges. The global chip shortage, triggered by a confluence of factors including pandemic-related disruptions and surging demand for electronics, has impacted the industry in recent years. Additionally, softening consumer demand for certain electronics products due to economic uncertainties has presented some setbacks. Yet, amidst these temporary challenges, a sense of optimism prevails.
A strong recovery in 2024: Driven by restocks, recoveries, and growth markets
The immediate future is looking bright for the electronics cluster, following the normalisation of inventory levels and an increase in demand for PC, smartphone, and automotive chips.
According to the Economic Survey of Singapore 2023, global original equipment manufacturers (OEMs) are expected to continue restocking chip inventories throughout 2024, boosting the demand for chips from semiconductor manufacturers, including manufacturers in Singapore.
Also, PC and smartphone shipments are expected to rise in 2024, driven by the demand of consumer and enterprise customers as they upgrade their personal and work devices. Another growth market is the automative sector, underpinned by a rising demand for electric vehicles. For electronics companies in Singapore, the rise in global demand is good news for those with the capacity to step in and fulfil these orders.
Rise of a Smart Nation: Fuelling demand for smart electronics
A decade since the launch of Singapore’s Smart Nation initiative in 2014, Singaporeans continue moving towards a future where digitalisation is at the heart of how we live, work, and play.
Singapore homes are becoming smarter, with connected appliances and sensors seamlessly integrating into our daily routines. According to a GlobalData report, Singapore’s automated homes market recorded revenues of over S$2.5 billion in 2023, representing a compound annual growth rate (CAGR) of 7.2% between 2019 and 2023. Diving deeper into the numbers, we see that the smart appliances segment account for the market’s largest proportion in 2023 with total revenues of $908 million, which is equivalent to 36.2% of the market’s overall value.
This explosive growth is translating into a growing demand for electronic components that enable these functionalities, such as miniaturised sensors, energy-efficient microcontrollers, and low-power connectivity chips like Bluetooth Low Energy (BLE) and Wi-Fi 6.
Businesses that can cater to this burgeoning demand for smart electronics have a clear advantage. For instance, companies like STMicroelectronics are leveraging this trend and developing innovative solutions (including kits and tools) specifically designed for smart home and smart building applications.
The Electronics Industry Transformation Map: Driving an industry forward, strategically
The Electronics Industry Transformation Map (ITM) was initially launched in 2017 and since then, has been a defining strategic initiative that has aligned the government, industry partners, unions and trade associations with its focus on propelling the electronics industry towards a future of increased productivity, higher value-added products, and a skilled workforce.
More recently, the electronics industry’s ITM has received a welcome refresh accompanying its updated name, ‘Electronics ITM 2025’. Speaking about the renewed ITM, Deputy Prime Minister Heng Swee Keat, said, “The refreshed Electronics ITM seeks to ride on the global growth momentum and cement Singapore’s position as a key manufacturing and research & development (R&D) hub for higher value-added electronic components.”
A key component of this update, according to the Singapore Business Review, is an increased job target that has moved the industry forward with its ambition of creating an additional 5,200 PMET (professionals, managers, executives and technicians) jobs in the electronics sector by 2025. To further accelerate progress, the government has also laid out plans to train over 1,000 PhDs in the next 10 years, specifically for the electronics industry.
This forward momentum is enhancing Singapore’s attractiveness as a potential investment location for global electronics brands. Notably, Apple has planned a US$250m investment to expand its campus in Ang Mo Kio, with construction expected to begin in late 2024. Speaking about the expansion, Apple’s CEO, Tim Cook, shared, “With our growing campus, Apple is writing a new chapter in our history here…… and we can’t wait for many more decades of innovation to come.”
Meanwhile, Taiwan chipmaker Vanguard International Semiconductor (VIS) is reported to be interested in building its maiden 12-inch chip fab plant here. The investment is estimated to be worth at least $2 billion.
Embracing Industry 4.0: Automation for efficiency and growth
While automation was once considered a threat to workers in the electronics industry, today, it is often seen as untapped potential. By embracing Industry 4.0 principles, which involve the integration of advanced technologies like robotics and artificial intelligence into manufacturing processes, businesses can achieve significant gains in productivity and efficiency. This allows them to compete more effectively on the global stage and respond to the ever-changing demands of the market.
An inspiring example of how Industry 4.0 is accelerating efficiencies, while empowering workers, can be seen on the assembly lines of electronics companies that employ collaborative robots (also called ‘cobots’) alongside human workers. Working together with humans, these cobots perform repetitive tasks like soldering and component placement with precision and speed, freeing up human workers to focus on more complex tasks that require problem-solving skills. This leads to more efficient and value-added production processes, and crucially, more fulfilled employees who enjoy taking on higher-level work (over monotonous tasks).
While automation presents tremendous benefits, it's also crucial to acknowledge the potential challenges. Concerns regarding job displacement due to increased automation are valid. However, these concerns can be mitigated through proactive workforce reskilling initiatives. By equipping existing employees with the necessary skills to operate and maintain automated systems, the industry can ensure a smooth transition and maintain a skilled workforce.
Artificial intelligence and machine learning: Harnessing the potential of emerging technologies
Artificial intelligence (AI) and machine learning are transforming various aspects of the electronics efficiency, driving innovation and efficiency. And as use cases expand, AI’s ability to enhance real-time decision-making and predictive analytics will become increasingly critical for businesses aiming to stay competitive in the electronics industry. Today, AI-driven predictive maintenance in industrial settings is helping to avoid unplanned downtimes, saving costs and boosting productivity. In smart agriculture, AI-powered soil sensors and simulation models are enabling farmers to optimise operations and enhance productivity. As demand for these technologies grow both at home and abroad, electronics companies in Singapore can benefit from fulfilling the demand in the supply chain.
Already, AI applications in Singapore are expected to expand significantly, particularly in predictive maintenance, smart agriculture, and consumer electronics. This is solidified by Ministry of Communications and Information’s (MCI) announcement in March 2024, where they introduced a slew of initiatives to boost Singapore’s economic potential through AI. These include investments of up to S$500 million into securing high-performance compute resources for AI innovation and capability building, plans for developing a Digital Enterprise Blueprint (DEB) to chart the next bound of enterprise digitalisation in Singapore, and more. Once again, these signs point to exciting opportunities for companies in Singapore’s electronics sector.
Expanding beyond hardware
Beyond the traditional focus on hardware manufacturing, exciting opportunities exist in the realm of software and services. The growth of the Internet of Things (IoT) necessitates robust software platforms for managing and analysing data collected from connected devices.
Electronics companies on our island can leverage their expertise in electronics to develop and offer comprehensive IoT solutions, encompassing hardware, software, and data analytics services. Additionally, with the increasing complexity of electronics systems, the demand for design services, prototyping, and testing is expected to rise. Businesses that can provide these specialised services have an opportunity to carve out a niche in the value chain.
Sustainability Concerns
Across the globe, the electronics industry faces growing scrutiny regarding its environmental impact. E-waste generation is a major concern, and responsible disposal and recycling practices are essential. Businesses need to adopt sustainable manufacturing practices through the lifecycle of their products. This includes the use of eco-friendly materials in product manufacturing, implementing energy-efficient processes during production, and more. Additionally, designing products with longer lifespans and promoting a circular economy approach can minimise environmental impact.
On this note, heartening sustainability initiatives can be seen across Singapore. These include the National Environment Agency’s initiatives for encouraging e-waste recycling and implementing responsible waste management practices, as well as electronics manufacturers like STMicroelectronics actively implementing eco-design principles and sustainability practices into their products. Actions like these contribute towards building our nation’s reputation as an electronics powerhouse that is also responsible and forward-thinking.
On the horizon: The road ahead for Singapore’s electronics industry
As Singapore continues to advance in the electronics sector, the path ahead is filled with both opportunities and challenges. The convergence of smart electronics, artificial intelligence, and the Internet of Things (IoT) presents unprecedented growth potential. Collaboration between industry players, government bodies, and academic institutions will be crucial for driving innovation and sustaining Singapore’s competitive edge.
The Electronics Industry Transformation Map (ITM) 2025 exemplifies this collaborative effort, focusing on enhancing productivity, fostering innovation, and creating a skilled workforce. Significant investments by global giants like Apple and VIS underscore Singapore’s appeal as a hub for advanced manufacturing and R&D, bringing economic benefits and further strengthening our local electronics ecosystem.
Looking ahead, the future of Singapore’s electronics industry is bright, driven by innovation, collaboration, and a commitment to sustainability. With a strategic focus on leveraging global trends and developing a deep pool of skilled industry talent, Singapore is well-positioned to continue our legacy as a global centre of excellence in electronics.