Singapore Powers Up for a Future of Smart Electronics, AI-driven Efficiencies, and IoT Innovations

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.

Growing a Vibrant Electronics Industry with Manufacturing 2030

The manufacturing sector remains a significant player to Singapore’s economy, as it contributes some 20 to 25 percent of Singapore’s annual gross domestic product (GDP). Singapore is the sixth-largest global exporter of high-tech products. Singapore’s manufacturing production grew 13.8 percent in May 2022 on a year-on-year basis, data released on Friday (24 June 2022) by the Economic Development Board (EDB) indicated.

In the past year, the Singapore Government has directed the manufacturing industry towards the main focus on advanced manufacturing development.  As robotics, artificial intelligence, 3D printing, smart sensor and the Internet of Things (IoT) are transforming the manufacturing sector, advanced manufacturing is a burgeoning market expected to reach US$156.6 billion by 2024, growing at a rate of 16.9 percent a year.

Under the manufacturing sector, a growing and vibrant electronics industry underpins Singapore’s economic growth, and contributes 8 percent to Singapore’s GDP.

On February 2022, Singapore Economic Development Board (EDB) reported that they were able to attract S$11.8 billion in fixed asset investments (FAI) in 2021, which is above their medium- to long-term targets of S$8 million to S$10 million. The investments are expected to create 17,376 new jobs in the coming years with a projected contribution of S$16.8 billion in Value-Added Per Annum, the EDB said.

Of S$11.8 billion FAI commitments in 2021, electronics accounted for more than 42 percent of the total investments, valued at S$5 billion. The investments were largely driven by manufacturing projects in the electronics industry from semiconductor and biotech firms.

Employment for the electronics industry in 2021 stands at 74,228, which is 21 percent of total manufacturing jobs. In addition, the manufacturing of finished electronics products creates many spin-offs to other segments of the economy, such as precision component manufacturers, chemicals and materials suppliers, electronic manufacturing systems companies and logistics service providers.

Manufacturing 2030

Early last year, the then Minister for Trade and Industry Mr Chan Chun Sing announced the government’s 10-year “Manufacturing 2030” plan, to grow Singapore’s manufacturing sector by 50 percent of its current value – S$106 billion – while maintaining its share of about 20 percent of GDP.

While speaking to the media after his visit to a precision engineering company Univac on 25 January 2021, Mr Chan said the pandemic had underscored the importance of the sector to Singapore’s economy. “In a Covid and a post-Covid world, having a more diversified economy is important for us,” he said.

Mr Chan noted that the performance of the biomedical electronics and precision engineering sub-sectors were bright spots at the height of the pandemic due to increased demand for such products.

“It will also become increasingly important for Singapore to have unique capabilities and products that cannot be found elsewhere,” he added.

“In the fight against Covid-19, securing essential supplies sometimes became a barter trade, and may continue to be so as we see global supply chains continue to be disrupted,” he said.

Mr Chan noted the 2030 goal will require the sector to grow by around 50 percent in the next decade. This is at the same pace of growth as the last 10 years, an ambitious target, considering that it will become harder to use foreign labour to supplement the Singaporean workforce. The manufacturing workforce will continue to make up around 12 to 15 percent of the total Singapore workforce, but with higher-skilled roles.

For the manufacturing sector to achieve the 2030 goal, it will have to develop its competitiveness through its ability to innovate quickly and produce higher-value products, and not through lowering the cost of production or labour.

The Government outlined a three-pronged strategy:

First, Singapore will continue to attract the best global and local companies in niche areas that will help the nation remain a critical node in global value chains. Singapore is a key manufacturing location for some of the biggest semi-conductor companies globally, such as Micron and Infineon. Both examples have the most advanced factories in the world, and they’re found on Singapore soil. Mr Chan added that having two of them in Singapore is good news, but Singapore will aspire to do much better to put many more of its companies in the same league as these frontier companies.

Second, Singapore will ramp up its efforts to grow the size and capabilities of local enterprises in advanced manufacturing to create better job opportunities for Singaporeans. Tailored support will be offered to promising enterprises through programmes such as Scale-Up SG, an 18-months programme that helps selected high-growth local companies expand. The programme aims to accelerate the companies’ growth so that they will be able to contribute significantly to Singapore’s economy and create good jobs for Singaporeans. Local companies will also be able to collaborate with leading manufacturing companies through the Global Innovation Alliance (GIA), a network of Singapore and overseas partners in major innovation hubs and key demand markets, with a focus on technology and innovation. The joint initiative between Enterprise Singapore and EDB, partners in-market players across GIA cities will run inbound and outbound GIA Acceleration Programmes to connect companies to overseas business and tech communities. The GIA Acceleration Programmes support Singapore startups and SMEs in venturing abroad. They also help International startups in scaling up in Asia through Singapore as a springboard.

Third, the Government will work with polytechnics and universities to make engineering and manufacturing attractive to students. “Manufacturing is no longer about repetitive tasks done in a structured environment. In fact, today, the biggest challenge for the engineering and advanced manufacturing sector is how fast we are able to innovate and prototype new products and services,” Mr Chan said.

Singapore Economy 2030

On 4 March 2022, Singaporean Minister for Trade and Industry Gan Kim Yong unveiled a new plan to strengthen local businesses in various sectors, with an aim to significantly grow the city-state’s trade volumes by 2030. In greater detail, Mr Gan noted the plan will be driven by separate strategies that will provide direction and coordinate actions across the four key pillars of the economy – manufacturing, trade, services and enterprises.

The Singapore Economy 2030 vision for manufacturing, trade, services and enterprises will put Singapore’s industries, enterprises, and workers on a firmer footing for long-term, sustainable growth over the next decade.

On the manufacturing front, the master plan lays out new initiatives under Singapore’s Manufacturing 2030 strategy announced in 2021, which aims to grow manufacturing value-add by 50 percent. Support measures will include “bespoke support for manufacturers with strong potential, to deepen their capabilities and expand their global reach”.

Mr Gan also spoke on the need to develop a strong local pipeline of talent and ensure that Singaporeans can access good jobs in the sector. To do so, companies will have to offer attractive career progression pathways in line with technological changes, and ensure these prospects are accessible.

To develop human capital for the manufacturing sector, M2030 Careers Initiative was launched on 4 March 2022, to train polytechnic and Institute of Technical Education (ITE) graduates.

The initiative will see collaboration among companies, polytechnics, and technical institutes to identify young graduates in engineering or technical education with relevant skills to the industry.

This includes the development of a handbook for employers, covering a range of best practices and resources to help manufacturers develop structured career progression pathways for their employees.

The Singapore Precision Engineering and Technology Association, which is developing the handbook with industry partners and the institutes of higher learning, will identify and work with at least 20 companies to pilot the adoption of these practices and pathways.

The initiative will offer at least 200 internships for ITE students from 60 companies by the end of 2022, as well as a pilot grant to hire ITE graduates for critical technician and assistant engineer roles.

In addition, an Accelerated Pathways for Technicians and Assistant Engineers (Manufacturing) Grant will be piloted with selected companies.

This, according to Mr Gan, will support companies in hiring and training ITE graduates for critical technician and assistant engineer roles through on-the-job training, with career progression and competitive salaries.

Apart from manufacturing, the other pillars are trade, services and enterprises.

On trade, the Ministry of Trade and Industry (MTI) intends to raise Singapore’s export value from S$805 billion in 2020 to at least S$1 trillion by 2030.

The Republic also wants to double its offshore trade value to US$2 trillion (about S$2.7 trillion) over the same period, while capturing more re-exports and transhipment flows to embed Singapore more deeply into the global supply chains.

“Given our small domestic market, global connectivity is essential to help our enterprises grow beyond our borders,” Gan said of the strategy’s trade ambitions.

To achieve this Trade 2030 strategy, Singapore will work on building a strong ecosystem of trading companies and activities by attracting leading global traders to anchor more of their upstream, downstream and innovation activities here in Singapore.

These traders will also serve as platforms to help other Singapore firms to break into overseas markets, the minister said.

More efforts will also go into growing a strong core of local traders “that command global scale and are highly innovative.”

Mr Gan noted that Enterprise Singapore will tap on its programme offerings, such as Scale-Up SG, that helps selected high-growth local companies expand; and the Enterprise Leadership for Transformation Programme (ELT), a one-year programme that supports business leaders of promising small and medium enterprises to develop business growth capabilities. The support is tailored to each firm’s circumstances and ambitions and will cover areas such as talent development, innovation, internationalisation and financing.

Growing Singapore’s trading volume will create “good jobs” for Singaporeans, said Mr Gan, noting that the trading sector employed more than 300,000 people in 2020. Of which, the majority were locals and close to 70 percent were PMET jobs.

As the trade sector continues to grow, the country must build a workforce with the necessary skills and knowledge, he added.

On top of a Jobs Transformation Map and other sector-specific workforce upgrading initiatives that are already under way, authorities are also working with the industry and institutes of higher learning to develop more talent in the trading of commodities such as liquified natural gas and carbon credits.

For the services sector, which represents more than 70 percent of Singapore’s economy, Mr Gan pointed out the need to develop new engines of growth and highlighted two “major waves of opportunities” – sustainability and digitalisation.

The Singapore Economy 2030 vision will also need to be supported by a vibrant ecosystem of local enterprises that are future-ready, globally competitive and possess deep innovative capabilities.

These enterprises will in turn create good jobs and meaningful careers for Singaporeans.

Likewise, the country will embark on an Enterprise 2030 strategy to “scale up efforts to identify and support promising local businesses.”

Continued strong growth of the semiconductor industr

At the Singapore Semiconductor Industry Association (SSIA) Semiconductor Business Connect 2022, held on 19 May, MOS Alvin Tan highlighted that continued strong growth of the semiconductor industry can be seen both globally and locally, fuelled by new tech applications like 5G, AI, cloud computing, the Internet of Things (IoT), and a strong demand for consumer electronics and digital services during the pandemic.

Despite shorter-term risks of disruptions to supplies of raw materials and equipment due to the conflict in Ukraine and lockdowns in China, the overall outlook for the semiconductor industry is very positive – the global market for semiconductors is projected to continue growing to reach US$1 trillion over the next decade, which is more than double the size of the semiconductor market in 2021.

In Singapore, semiconductor manufacturing contributes more than 80 percent of the electronics manufacturing output and 7 percent of the nation’s GDP. Semiconductor continues to be the fastest growing segment of the electronics industry, with output projected to increase 30 percent year-on-year in 2021.

Today, Singapore accounts for 11 percent of the global semiconductor market. Some 20 percent of global semiconductor equipment is manufactured in Singapore. Singapore’s semiconductor industry is poised for further growth, with around 2,000 more jobs expected to be created in the next 3 to 5 years.

As part of Singapore’s Manufacturing 2030 vision to become a global business, innovation, and talent hub for advanced manufacturing, Singapore aims to anchor frontier investments from global companies with specialised capabilities to support its local manufacturing ecosystem.

Singapore has recently attracted investments from leading global semiconductor companies such as GlobalFoundries, Siltronic, and UMC. These companies invest here because of skilled talent, excellent global connectivity, ease of doing business, and well-developed semiconductor research and manufacturing ecosystem. In turn, they further drive the growth of the semiconductor industry and contribute greatly to Singapore’s R&D ecosystem with high value activities.

Over the years, Singapore has also been building its capabilities and capacity in the electronics and semiconductor industry to strengthen its role in the global supply chain.

JTC has developed four Wafer Fab Parks (WFPs) to meet the specific needs of the industry. The WFPs will be rolling out a series of physical enhancements, such as new lifestyle amenities, to create a more vibrant and conducive environment for companies and their employees.

In addition, JTC is also building semiconSpace in Tampines Wafer Fab Park, which is a new plug-and-play development that will meet the stringent requirements of semiconductor companies, such as vibration-sensitive flooring. The first phase is targeted to be completed by this year.

The Government will continue to work with key industry partners and schools to attract more locals to join the manufacturing sector. Mr Alvin Tan said, “We will also ensure that our workers have the right skills to benefit from the opportunities in this sector.”

Another major priority in the efforts to grow the semiconductor industry is sustainability. The semiconductor industry plays a critical role in Singapore’s green transformation. Information and computing technology are projected to consume up to 20 percent of gl

Another major priority in the efforts to grow the semiconductor industry is sustainability. The semiconductor industry plays a critical role in Singapore’s green transformation. Information and computing technology are projected to consume up to 20 percent of global energy demand by 2030, with chip manufacturing accounting for most of its carbon footprint. The industry can collectively make an impact on climate change, by making decisive and concerted actions to embrace sustainability and drive change.

The green transformation presents exciting economic opportunities for semiconductor companies. Companies that are able to reinvent themselves to harness sustainability as a competitive edge can become more efficient, reduce costs, and better meet their shareholders’ and customers’ expectations.

The Government will support companies on this journey towards more sustainable practices. “Under the Urban Solutions and Sustainability (USS) domain of our S$25 billion Research, Innovation and Enterprise 2025 (RIE2025) plan, we will support the development and commercialisation of sustainability solutions,” said Mr Tan.

“Under the Green Economy pillar of the Singapore Green Plan 2030, we aim to strengthen global and regional partners to conduct R&D in green technologies.”

To remain globally competitive and seize opportunities in the global semiconductor supply chain, companies will need to come together to explore new business opportunities, including collaborating with suppliers and partners to develop innovative solutions.