(Bloomberg) — Singapore can compete to make specialty chips for cars and phones without wading into the subsidy race that other countries are participating in, Deputy Prime Minister Lawrence Wong said.
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“All these big boys are paying so many subsidies to attract high-end semiconductor manufacturing to their respective homes, and we can’t afford to overbid, we can’t afford to be in a subsidy arms race, but we’re doing what we can to create a favorable environment,” Wong said at the Milken Institute Asia Summit in Singapore on Wednesday. The city-state “can be competitive in specialty chips,” he added.
Singapore is already home to several semiconductor factories, including a joint venture between Taiwan Semiconductor Manufacturing Co. and NXP Semiconductors NV, which focuses on using legacy technologies for chips required by a wide range of electronics and products. These chips are still important as they are critical components for everything from smartphones and electric vehicles to military hardware.
The United States, the European Union and Japan are all offering billions in incentives in the hope of luring global chipmakers, including TSMC, to build advanced facilities on their turf, yet few countries have sufficient infrastructure and supply chains to support the operation of factories that can produce cutting-edge semiconductors that power new technologies, including artificial intelligence applications.
Expanding the semiconductor value chain weaves into Singapore’s goals to transform the economy, enable more digital innovations and become better equipped to deal with slowing growth, rising costs of living and declining exports.
At the same time, Wong, who also serves as finance minister, warned against foreign money pouring into the city-state’s property market and making housing unaffordable for Singaporeans.
“We want the wealthy who are here to contribute to society. Play their part, pay their dues,” he said. “Of course, another way they can contribute is through taxes. We always review our tax system on an ongoing basis. Everyone must do their part in nation-building, everyone pays taxes, but the rich pay more.”
By 2022, Singapore attracted a record S$22.5 billion (about US$16.5 billion) in fixed asset investment commitments, thanks to what its Economic Development Board described as an “unprecedented semiconductor supercycle.”
The board sees the city-state continuing to attract mature node and wafer fabrication, in addition to design-related chip jobs growing steadily, though it may not repeat the 2022 performance in terms of investment.
–With assistance from Aradhana Aravindan and Natalie Choy.
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