What Makes Singapore a Prime Location for Semiconductor Companies

The semiconductor industry is a key driver of technological innovation, powering everything from smartphones to AI systems. Singapore, with its combination of strategic advantages and supportive infrastructure, has established itself as a significant hub for semiconductor companies worldwide.

In 2023, Singapore’s semiconductor manufacturing sector generated over S$133 billion (US$101 billion), contributing significantly to the country’s electronics manufacturing output. The sector now accounts for approximately seven percent of Singapore’s GDP, underlining its importance to the national economy.

A global semiconductor hub

Singapore plays a vital role in the global semiconductor industry, contributing more than 10 percent of the world’s total semiconductor output, around 20 percent of global semiconductor equipment production, and five percent of the global wafer capacity. This positions Singapore as a critical player in semiconductor manufacturing, with major U.S.-based companies like Micron Technology and Applied Materials making significant investments in the region.

Diverse semiconductor value chain

Singapore’s ecosystem covers the entire semiconductor value chain, from research and development (R&D) to manufacturing and testing. The country is home to major global semiconductor firms as well as small-to-medium enterprises (SMEs) involved in wafer fabrication, assembly, packaging, and testing.

Ongoing and future investments

The semiconductor industry in Singapore continues to grow, with companies like NXP Semiconductors and Vanguard International Semiconductor Corporation announcing plans to invest US$7.8 billion ina joint venture for a new silicon wafers manufacturing facility, expected to begin operations by 2027. This investment aligns with the increasing global demand for semiconductors, particularly in emerging sectors like electric vehicles (EVs), artificial intelligence (AI), and renewable energy technologies.

Strategic location in Southeast Asia

A gateway to Asia’s major markets

Singapore’s central position in Southeast Asia provides easy access to critical Asian markets such as China, Taiwan, Japan, South Korea, and ASEAN. This prime geographic location enables semiconductor companies to efficiently establish supply chains and transport products across the region and the globe.

Efficient global connectivity

Singapore’s world-class air and sea logistics, coupled with its efficient shipping routes, offer seamless connectivity for semiconductor companies. In 2023, the Port of Singapore handled a record 39.01 million Twenty-foot Equivalent Units (TEUs), marking an increase of 4.6 percent from 2022. For the first five months of 2024, the port handled 16.9 million TEUs, an increase of 7.7 percent compared to the same period in 2023.

Further, Changi International Airport recorded 58.9 million passengers in 2023, marking an increase of 83 percent from the previous year. In the first half of 2024, the airport saw 33 million passengers or 99 percent of the passengers the airport saw in the same year in 2023.

Consistent utility supply for manufacturing

With one of the world’s most stable power grids, Singapore ensures uninterrupted operations—a critical factor in semiconductor manufacturing. Additionally, the nation’s advanced water treatment and waste management systems further support the unique needs of semiconductor companies.

Comprehensive intellectual property protection

Strong legal framework to protect innovation

Singapore has established a robust intellectual property (IP) protection framework, which is crucial for industries like semiconductors that rely heavily on proprietary technologies. The country’s strict enforcement of IP laws helps protect technological assets, creating a secure environment for innovation and development.

Highly skilled workforce

Singapore’s focus on science, technology, engineering, and mathematics (STEM) education ensures a constant stream of highly skilled professionals entering the semiconductor sector.

The country’s semiconductor workforce is currently around 35,000 strong, bolstered by close collaboration between the Economic Development Board (EDB), Institutes of Higher Learning (IHLs), the Singapore Semiconductor Industry Association (SSIA), and various industry partners. These partnerships ensure a steady pipeline of talent, ready to meet the evolving needs of the semiconductor sector.

Several initiatives are in place to attract and develop skilled workers for the industry. The Singapore Industry Scholarships (SgIS) and the Industry Postgraduate Program (IPP) aim to encourage youth to enter the semiconductor sector while enabling technical experts to gain industry-specific experience.

In 2024, GlobalFoundries, Micron, STMicroelectronics, and the Institute of Microelectronics (IME) under the Agency for Science, Technology, and Research (A*STAR) also signed MoUs with the Institute of Technical Education (ITE) to offer student internships, staff training, and collaborative projects, further strengthening the talent pipeline for Singapore’s semiconductor industry.

Government incentives and supportive policies

The Singaporean government has committed approximately S$18 billion (US$13.6 billion) between 2021 and 2025 to foster research, development, and innovation within the semiconductor sector. These funds are allocated for R&D grants, infrastructure development, and tax incentives, which help lower the cost of doing business and promote growth.

Key tax credits and incentives

One of the notable schemes is the Refundable Investment Credit (RIC), introduced in the 2024 Budget. This initiative provides up to 50 percent support for qualifying expenditures, such as manpower costs, professional fees, materials, logistics, and capital expenditures. The credits can be used to offset corporate income tax, with any unutilized credits refundable in cash over four years.

Additionally, the Enterprise Innovation Scheme (EIS) supports activities such as R&D, intellectual property registration, IP acquisition, employee training, and collaboration with polytechnics or qualified partners. Under this scheme, businesses can benefit from a 400 percent tax deduction or allowance on qualifying expenditures, capped at S$400,000 (US$304,000) annually until 2028.

For financial institutions operating in Singapore, the Financial Sector Incentive (FSI) Scheme offers concessionary tax rates ranging from 5 to 13.5 percent, depending on the nature of their activities. These concessions apply to financial services such as bond markets, derivatives, equity markets, and credit facility syndication, facilitating further regional expansion.

Another important incentive is the Finance and Treasury Centre (FTC) Income Taxation, which allows approved companies to benefit from reduced tax rates of either 8 or 10 percent on income derived from international treasury management, fund management advisory services, investment analysis, and credit control administration.

Political and economic stability

A transparent and stable environment

Singapore’s stable political climate and well-established legal system make it an attractive destination for semiconductor companies. The country’s low levels of corruption and transparent business environment provide a secure and predictable operating climate for multinational corporations.

Reliable financial system

With a robust financial system and strong support for innovation, Singapore has become a trusted hub for global investments. For the capital-intensive semiconductor industry, this stability ensures the security of long-term investments and the ability to plan for sustained growth.

Singapore’s strategic importance in the semiconductor industry

With its strategic location, advanced infrastructure, government support, and skilled workforce, Singapore has firmly established itself as a global leader in the semiconductor industry. As the sector continues to evolve, with a growing demand for technologies like AI and EVs, Singapore remains well-positioned to lead in semiconductor innovation and manufacturing, making it a prime destination for future investments.

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