OUTLOOK 2005

After 35 years in Singapore, STMicro has "pioneer" status, and the clout that goes with it. Fully half of ST's Asian staff work in Singapore, including 6,700 in front- and back-end fab jobs and another 750 in research and administration. ST's employment in Singapore has doubled since 1999 and the company recently announced it will invest another $1.2 billion in Singapore over the next two years.

But even as STMicro, Infineon Technologies and Xilinx continue to expand here, other semiconductor companies are opting for China. In the early 1990s, foreign investment flowed into the Association of Southeast Asian Nations, including Singapore. Last year, the figures skewed in China's favor, as the mainland attracted some $50 billion in foreign investment, compared with $20 billion split among the Southeast Asian countries.

China's increasing presence in the region didn't stop Singapore's powerful Economic Development Board (EDB) from supporting STMicro when it needed to hire 500 technicians recently in the People's Republic. Drawing on its connections in China, the EDB prepared 500 resumes of Chinese electronics technicians, arranged neatly for ST's recruiters to peruse, said Marquet, who has been based in Singapore since 1990.

"Singapore is small enough that it can be run as a benevolent dictatorship," said Dan Hutcheson, president of VLSI Research (Santa Clara, Calif.). He cited as an example the time an EDB official ordered the customs office to open up at midnight to bring in fab equipment for a Texas Instruments-operated joint-venture fab in Singapore. TI got an extra day's worth of production out of the equipment as a result.

Singapore has 14 wafer fabs, including two 300-mm fabs operated by United Microelectronics Corp. and Chartered Semiconductor Manufacturing Ltd. Another 19 assembly-and-test operations are based on the island, along with 40 design houses.

Few of the venture-backed fabless companies have turned the corner thus far. Now, most of the island's chip designers work for large multinationals. Tan Choon Shian, director of the EDB's electronics and precision-engineering department, said Singapore last year attracted two fabless chip companies to set up design operations: Taiwan's MediaTek — the world's largest maker of chip sets for optical drives — and Hong Kong-based Solomon Systech, which designs ICs aimed at cell phone displays.

In recent years Singapore has strengthened its intellectual-property protection laws and university research centers, said Joanne Itow, foundry analyst at Semico Research (Phoenix). With all three of the major foundries operating in Singapore, two of them with 300-mm fabs, the island is well-positioned in chip manufacturing. However, growth may be less rapid than during the past decade, she said.

To nurture more innovative companies, Singapore is looking to improve its research and university systems. "We are continually looking for ways to foster greater creativity," said the EDB's Tan. In the area of R&D, the government has set up a committee, chaired by the deputy prime minister, Tony Tan, "to recommend the best use of Singapore's R&D resources, given our small population, and identify new areas of growth that we can focus on," he said.

The committee is visiting other small, technologically advanced economies, including Switzerland, Denmark and Sweden, "to learn how they are able to sustain strong science and technology sectors despite their small populations." It will make its recommendations by mid-2005, Tan said.

Chia Song Hwee, the CEO of Chartered Semiconductor, said he puts "people training in disciplines that are relevant to industry" at the top of his list of challenges for Singapore. Chartered's head count has grown as the company ramps up its 300-mm Fab 7. The company has been making efforts to find the right mix of technicians and engineers, Chia said.

In that regard, Singapore has been able to bring in thousands of engineers and tech-savvy managers from Western nations who are happy to relocate. Singapore is gradually making a transition from a largely British-colonial-style culture to a sophisticated mix of Asian and Western cultures that someday may rival the allure of New York or Paris, said Marquet of STMicroelectronics — albeit in a hot climate.

PERSON TO WATCH
Chia Song Hwee is an accountant by training (he graduated from Edith Cowan University in Australia). That may explain the language the CEO of Chartered Semiconductor uses to describe why he decided to partner with IBM Corp. for 90- and 65-nanometer semiconductor process technology.

"There were risk elements in working with IBM, particularly because the development center was not in Singapore, but in Fishkill, N.Y. We identified the risk areas and worked with IBM to mitigate those risks," Chia said. "Fundamentally, we decided the relationship path was the way to go."

That agreement, announced in November 2002, came just four months after Chia was named the Singapore foundry's chief executive officer. Infineon Technologies joined the IBM-Chartered alliance in 2003, and Samsung Electronics came on board in 2004.

After beginning his career at Schlumberger, Chia joined Chartered's finance department in 1996. He is the first leader of Chartered not to come from Motorola's semiconductor operations.

Chia stopped short of saying whether Sony's Playstation chips, including the Cell processor, will be made at Chartered. "We expect to have several customer announcements to make in 2005," he said.

COMPANY TO WATCH
Singapore's flagship technology company, Chartered Semiconductor Manufacturing Co. Ltd., is apparently back in the red. The company expects to announce a $50 million loss for its 2004 fourth quarter, compared with a $16 million profit for the final quarter of 2003.

One bright spot: A process development alliance with IBM Corp. for submicron technology (see story, this page) already is paying dividends. CEO Chia Song Hwee said Chartered's decision to work with IBM on silicon-on-insulator technology played a major role in a recent decision by AMD to use Chartered as a foundry.

With microprocessors the most demanding chips to manufacture, the deal is a plum for Chartered. "The agreement with AMD includes a commitment for a minimum number of wafers per month, based on AMD's projected demand and the timing of the ramp of their first 12-inch fab [in Dresden, Germany]," Chia said. "It is all part of a trend for companies to require a second source for their important products."

AT A GLANCE
Population (2002): 4.2 million
Employment in semiconductor industry (2003): 28,660
Electronics and precision-engineering output (2003): $44.5 billion
Semiconductor output (2003): $13.4 billion (5 percent of world production)
Leading technology: 90-nm CMOS at Chartered, now in pilot production
Top companies: Chartered Semiconductor, Creative Labs
Favorite pastime: shopping at air-conditioned malls (Singapore is near the equator)
Famous drink: Singapore sling
Source: Singapore Economic Development Board, EE Times