The Singapore Miracle: How a Small City Became the Semiconductor Giant

In 1967, the government set up the Economic Development Board (EDB) to attract foreign investment and help local companies grow. The EDB offered tax breaks, subsidies, and other incentives to semiconductor companies that set up shop in Singapore.
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Introduction

The Singapore remarkable transformation from a small, resource-poor island to a wealthy global financial and economic hub can be attributed to a combination of strategic factors, effective governance, and forward-thinking policies.

The journey began in the 1960s and evolved over several decades. Here are the key historical reasons for Singapore’s emergence as a semiconductor hub:

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1. Strategic Vision and Planning (1960s-1970s):

Singapore’s leaders recognized the importance of industrialization to secure the country’s economic future. In the 1960s, the government embarked on a strategy to attract foreign investment and develop a strong manufacturing base. The Electronics Industry Promotion Scheme (EIPS) launched in 1968 was a crucial step, offering incentives to multinational corporations (MNCs) to establish electronics manufacturing facilities in Singapore.

I was a product of the times, the war, the occupation, the reoccupation, my 4 years in Britain, admiring but at the same time questioning whether they are able to do a better job than we can.

~Lee Kuan Yew, First prime minister, Singapore

2. Geopolitical Factors (1970s-1980s):

During the Cold War, global geopolitical tensions and the rise of electronics for military and consumer applications created a demand for semiconductor technology. Singapore’s stable political environment, strategic location, and skilled labor force made it an attractive destination for multinational electronics companies looking to diversify their supply chains.

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3. Pro-Business Policies (1980s-1990s):

The Singaporean government implemented investor-friendly policies such as tax incentives, streamlined bureaucracy, and efficient infrastructure development. The Economic Development Board (EDB) played a pivotal role in promoting semiconductor manufacturing as a key sector. Government-linked companies like Chartered Semiconductor Manufacturing (now GlobalFoundries) were established to partner with MNCs and build local expertise.

“A nation is great not by its size alone. It is the will, the cohesion, the stamina, the discipline of its people, and the quality of their leaders which ensure it an honorable place in history.”

~Lee Kuan Yew, First prime minister, Singapore

4. Investment in Education and Workforce (1980s-Present):

Singapore prioritized education and training to develop a skilled workforce for the semiconductor industry. Technical institutions and universities were established, offering relevant engineering and technical programs. The government’s focus on education helped create a pool of talent that attracted semiconductor companies.

5. Research and Development (R&D) Focus (1990s-Present):

The government invested in research and innovation to advance the semiconductor sector. The establishment of research institutes like the Institute of Microelectronics (IME) and partnerships with universities and private companies fostered technology development and collaboration.

6. Cluster Development (2000s-Present):

Singapore’s strategy of creating industry clusters contributed to the semiconductor sector’s growth. The development of wafer fabrication parks, research hubs, and industrial estates led to a concentration of semiconductor-related activities, enabling knowledge-sharing and synergy among companies.

7. Adaptation to Market Trends (2000s-Present):

Singapore’s semiconductor industry adapted to market shifts, embracing advancements like the shift from memory chips to logic chips and the rise of emerging technologies like Internet of Things (IoT) and artificial intelligence (AI). The industry’s ability to innovate and pivot helped maintain its competitiveness.

8. Strong Infrastructure and Connectivity:

Singapore’s well-developed infrastructure, including world-class ports, airports, and logistics facilities, facilitated the smooth movement of raw materials, components, and finished products, making it an efficient hub for semiconductor manufacturing and export.

These historical factors, combined with Singapore’s commitment to a business-friendly environment, a skilled workforce, and continual alignment with industry trends, have collectively propelled it into the status of a premier semiconductor nation. The semiconductor sector remains a vital component of Singapore’s economy, contributing significantly to innovation, export revenues, and technological progress.

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