Why Singapore Can Be A Valuable Ally In India's Chipmaking Ambitions

At a time when India has made the development of its semiconductor industries a top policy priority, Singapore is emerging as an unexpected yet promising ally in this high-tech odyssey.

New Delhi has accelerated efforts to become a global powerhouse in semiconductor production, with three factories breaking ground this year and a fourth recently greenlit.

Still, whether semiconductor production in India can overcome "infrastructure and talent" challenges remains unclear. That's where Singapore comes in — a well-oiled semiconductor machine that could provide crucial support to India's ambitious 'chip nationalism.'

Despite its small size and high operating costs, the East Asian nation today accounts for around 10 per cent of global chipmaking output, 5 per cent of global wafer fabrication capacity, and 20 per cent of semiconductor equipment production.

Its semiconductor ecosystem is robust and all-encompassing, spanning value chain segments — IC design, wafer fabrication, assembly, packaging, and testing. Hosting nine of the world's top 15 semiconductor giants, Singapore's industry vibrancy is undeniable.

Thus, as India seeks to position itself as a promising alternative to China amid tensions between Beijing and the West, Singapore’s expertise and established ecosystem could be a game-changer.

To begin with, India’s semiconductor ambitions face a significant talent shortage. A report by TeamLease Degree Apprenticeship estimates the sector will need an additional 250,000 to 300,000 professionals by 2027. Singapore’s universities, offering specialised courses in semiconductor technology, could help bridge this talent gap.

Moreover, while Singapore faces limitations in land and labor, India’s abundant resources present a strategic opportunity for integration into Singapore’s semiconductor value chain. Encouraging Singaporean companies to expand into India could effectively leverage these complementary strengths.

Also significant for India is Singapore's base of semiconductor equipment and material manufacturers. Collaboration with Singaporean companies in these sectors could greatly strengthen India's semiconductor manufacturing ecosystem.

In addition, although the rivalry between the US and China is heating up over advanced semiconductors, Singapore is relatively neutral geopolitically, making it less likely to be affected by any geopolitical conflict.

This is why, during Prime Minister Narendra Modi’s visit to Singapore this week, both nations signed a Memorandum of Understanding (MoU) to boost semiconductor collaboration.

Under this agreement, India and Singapore will cooperate in semiconductor cluster development and talent cultivation in semiconductor design and manufacturing.

Notably, Singaporean companies that are part of global semiconductor value chains are keen to invest in India. The dialogue mechanisms established under this MoU will facilitate their investments.

PM Modi’s visit to AEM Holdings Ltd — a Singaporean titan in the semiconductor and electronics sector — could set the stage for elevated bilateral cooperation in chipmaking.

With Singapore as India's sixth-largest trade partner, its largest in ASEAN, and the top source of foreign direct investment in the last financial year, this partnership is well-positioned to integrate seamlessly into the global semiconductor ecosystem.