The backbone of Singapore's manufacturing sector, electronics is poised for a strong showing this year and the next.

Since its start in the 1960s, the city-state's electronics industry has grown from strength to strength and is a major player in the global electronics industry.

Singapore is the choice location for electronics companies to create and manage new markets and products. The city-state offers a total solutions environment for industry players, presenting them with an attractive value proposition. In turn, the presence of international players here has transformed the country into a major electronics hub. The industry is a major reason for Singapore's economic growth. Consider the figures: Electronics investments amounted to S$4.9 billion (US$3.53 billion) in fixed asset investment (FAI) and S$1.8 billion (US$1.3 billion) in total business spending (TBS). These figures are back to pre-recession levels, and reflect investor confidence in Singapore's fundamentals of good governance, pro-business policies, established infrastructure and an educated and skilled workforce.

Strong Showing
Growth in the electronics industry is expected to remain strong for 2010 and beyond. Output for the industry shot up by 60.6 per cent year-on-year in the first quarter of 2010, as global demand increased and electronics manufacturers here expanded capacity. The uptick, driven by both manufacturing and services sectors of the electronics industry, also fueled a rise in job opportunities within the sector. The Singapore Economic Development Board (EDB) expects more than 4,500 skilled electronics jobs, including more than 2,000 HQ and R&D positions, to be generated from investments this year. Within electronics, the semiconductor sector posted the strongest showing of 89.3 per cent year-on-year, exceeding forecasts for the period.

"With strong performances from both manufacturing and services sectors of the electronics industry, we are optimistic about continued growth for the industry in 2010 and beyond," said Yeoh Keat Chuan, Assistant Managing Director, EDB, who added, "We would also like to highlight the significant contribution from electronics-related services activities which include regional headquarters, control tower operations and R&D. These complement and strengthen the manufacturing sector."

Testament to Singapore's Competitiveness
Industry insiders see the resilience of the industry as a testament to the city-state's sustained competitiveness. Many electronics companies based here were able to make timely investment decisions to take advantage of the global economic recovery. For instance, in the fourth quarter of 2009, STMicroelectronics and United Microelectronics Corporation (UMC) announced plans to expand their Singapore fab capacities by 30 per cent according to the media briefing on electronics by the EDB. TECH Semiconductor and UMC also upgraded to industry-leading process technologies. This investment momentum is likely to continue beyond 2010, with companies pushing through with expansion plans that were put on hold because of the economic downturn.

Services is another area of growth within the electronics sector. Value added for electronics services increased at a compounded annual growth rate of 18 per cent from 2004 to 2008, accounting for 38 per cent of total electronics value-added or S$8.4 billion (US$6.06 billion) in 2008. Services valueadded is expected to grow further as Asia becomes the focus for global electronics giants. And since Asia is also the fastest-growing market, industry insiders point to Singapore as the strategic choice for companies to set up regional headquarters to manage their expanding Asian portfolio. Aside from big multinational corporations, global small and medium enterprises (SMEs) also see Singapore's advantages. For instance, global SMEs Inphi Corporation and Lattice Semiconductor set up Asian headquarters in Singapore to undertake functions like business development, production management, quality assurance and engineering support.

Research and development (R&D) is another area where electronics is gaining ground, accounting for 59 per cent of total private sector gross R&D expenditure, according to A*STAR. Electronics R&D is traditionally focused on developing cutting-edge processes to support manufacturing. This time around, companies are developing next generation components and products for developed markets and Asia. Increasingly, companies are also setting up R&D centres in Singapore to create products designed with the sophisticated needs of the Asian consumer in mind. This year, Infineon and Hewlett-Packard have set up R&D and design centres respectively to come up with solutions and products tailored to suit the needs of Asian markets.

Moreover, because they're at the forefront of advanced technology, electronics engineers and researchers are well-positioned to push the envelope in coming up with innovation solutions in green electronics, bioelectronics, security and plastic electronics, all growth areas addressing future issues.