Singapore chipmakers unfazed by tariff threat, see AI and talent hunt as bigger challenges

SINGAPORE – Singapore’s semiconductor industry will continue to invest and innovate to address the growing demand for more efficient chips, despite threats of new trade barriers that can further disrupt its highly globalised supply chain.

The more pressing challenges for chipmakers and companies in related businesses – both multinational and local – are the hunt for talent, and the race to innovate and stay competitive and relevant in the era of artificial intelligence (AI).

To be sure, chip companies at the three-day Semicon South-east Asia 2025 event in Singapore, held from May 20 to 22, were unanimous in their view that, despite its solid growth prospects, the industry will not be immune to a global economic slowdown induced by the current trade policy uncertainty and any new tariffs that would affect consumer demand for electronic goods.

While making its supply chains more adaptable to geopolitical demand and supply vulnerabilities remains an uphill task, the industry has so far successfully weathered intensifying trade tensions and technology competition between the world’s two largest economies – the US and China – since 2017.

In the same period, global chip sales have increased at a record pace and are expected to cross the US$1 trillion (S$1.28 trillion) mark by the early 2030s from around US$627 billion in 2024.

More recently, chip revenues are getting an additional uplift from the fast-growing cloud capacity, with new data centres popping up worldwide to handle the immense computational and data storage demands of AI applications.

The industry, however, sees the AI opportunity as a challenge as well.

Referring to AI, Mr Tim Breen, chief executive officer of chipmaker GlobalFoundries, said at the Semicon event: “There is, of course, optimism across the board, but within that is a question – Are we ready? Are we ready for that growth?

“If innovation takes five companies to make it happen, do we really know how to work together in groups globally in a world that is more fragmented?”

As a step in deepening its innovation partnerships, GlobalFoundries, which has a chipmaking plant in Singapore, signed a pact on the sidelines of the event with A*Star, the Republic’s lead public sector research and development (R&D) agency.

The collaboration will give the chipmaker access to A*Star’s R&D facilities for development and support for workforce skills enhancement in advanced packaging – the most talked-about technology at the Semicon event.

Advanced packaging – which involves combining multiple chips and components into a single package – has become a key priority for the industry.

Amid the need of AI workloads for more computational speed, data storage capacity and high electricity consumption, the technology delivers processing units that not only excel in performance, but are also energy-efficient.

Mr Breen believes that no company in the world can bring such complex semiconductor devices to market on its own. 

“You need a whole host of innovation, you need a whole host of manufacturing partnerships to do that,” he said.

Other company executives also echoed Mr Breen’s view, saying chipmakers are deepening their collaboration with test and packaging companies, chip designers and equipment makers to address the AI imperative.

Mr Andrew Goh, corporate vice-president and general manager for South-east Asia at Lam Research, which makes machines used in chip manufacturing, said his company is also deepening its partnerships with its customers, suppliers and other stakeholders in the ecosystem to help address both the supply chain and technological challenges.

“We are working with the governments, schools and universities to collaborate on the R&D and innovation that we can do locally,” Mr Goh told The Straits Times.

The company has a network of plants across Asia, including one in Malaysia and two offices in Singapore, to manage its supply chain and customer support.

Mr Goh said Lam has ongoing engagements with the Republic’s Nanyang Technological University and National University of Singapore to also help it maintain a talent pipeline, and develop and retain its workforce.

He said AI is not only changing the market for companies like Lam, with demand rising for machines for advanced packaging and manufacturing of advanced chips, but it is also having an impact internally.

AI is being increasingly used to boost factory floor efficiency of chipmakers and equipment makers like Lam, which also means increasing demand for talent.

“Maintaining a talent pipeline has become a pressing challenge for the industry, not only in Singapore, but in other countries and regions as well,” Mr Goh said.

The Semicon event also had a dedicated space for a career exploration fair that hosted several career talks.

Ms Michelle Phua, director of operations management at chip equipment maker Applied Materials, said the industry has broadened the scope of talent from engineering graduates and diploma holders to professionals in related fields such as software development.

Singapore universities and polytechnics offer several programmes focused on areas like integrated circuit design, manufacturing and operations.

In recent years, they have also launched short courses for graduates and mid-career professionals under the umbrella of the SkillsFuture scheme – as part of a joint initiative by the Ministry of Trade and Industry and Government Technology Agency of Singapore.

Still, developing a sustainable talent pipeline is seen as a problem not only by large multinational companies such as GlobalFoundries, Lam Research and Applied Materials, but also by small and medium-sized enterprises.

Mr Kenneth Lee Wee Ching, CEO of Global TechSolutions – which provides refurbishment, installations and field service support to chipmakers – said effort is needed so graduates do not see chip manufacturing as less glamorous.

“We put in a lot of effort, like participating in career events and going to educational institutions to introduce ourselves and the industry,” he said.

Still, many company executives said they appreciate the Government’s effort to boost talent supply, and recognise the importance of working closely with universities and polytechnics to encourage more of their graduates to join the industry. 

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