Impact on Singapore of US-Imposed Restrictions on Sale of Semiconductor Products to China

Mr Desmond Choo asked the Minister for Trade and Industry in view of the United States-imposed restrictions on sales of semiconductor products to China from 7 October 2022 (a) what has been the impact on the semiconductor industry in Singapore; and (b) whether, and, if so, how is the Ministry supporting the industry in building up its resilience to geopolitical tensions.

Mr Speaker, the latest US export controls announced on 7 October 2022 are aimed at restricting China’s access to specific types of advanced semiconductor chips, especially those with wide applications in artificial intelligence and supercomputing. While these measures are not targeted at Singapore, our semiconductor sector could still be impacted, since semiconductor supply chains are highly complex and globalised. Many semiconductor companies operating in Singapore have manufacturing processes and products that rely on US technology, which may be subject to export controls imposed by the US government.

While Singapore and our companies cannot be completely sheltered from geopolitical tensions, we can mitigate the risks by ensuring that we remain a stable, trusted and well-connected location for companies to do business. We are also working with our companies to strengthen their business continuity plans and diversify their supply chains. We will also pursue the strategies we announced recently at the launch of our Electronics and Precision Engineering Industry Transformation Maps earlier this week. These include anchoring investments from leading global companies, doubling down on R&D investments in emerging semiconductor technologies and also deepening our talent pipeline.

Collectively, these will enhance Singapore’s relevance in global semiconductor supply chains and strengthen our resilience against any shocks.

I thank the Minister of State for his answer. I have two supplementary questions. The first is: does the Ministry have at least an estimation of how much of our semiconductor industry is exposed to this new set of regulations from the US and, therefore, affecting the economic performance of the industry? Second, in terms of the various free trade agreements that we have in place, how much have they allowed us and the semiconductor companies situated here to be able to navigate the changing landscape for the semiconductor industry?

I thank the Member for his supplementary questions. As I mentioned in my main reply, Singapore is a part of the global supply chain of the semiconductor industry. So, many of our companies do rely on US technologies as part of their manufacturing processes and operations. There could thus be some impact on these companies, but we do not have granular information at this stage.

However, the situation is constantly evolving. So, we are monitoring it very carefully. It is equally possible that the US could be contemplating additional steps that may further reshape or affect the technology supply chains. Our companies will be affected in certain ways, given that we are part of this global semiconductor supply chain. Prime Minister Lee, in Australia recently, said this week that these trade restrictions could result in, I quote, "less economic cooperation, less interdependency, less trust and possibly, ultimately, a less stable world" – which is a clear, negative force for Singapore. Against this backdrop, it is thus more important that we uphold and reiterate our position as a stable, trusted and well-connected hub and location for businesses, including the semiconductor businesses.

Earlier this week, together with Deputy Prime Minister Heng Swee Keat, we were at ITAP Asia where many of the semiconductor companies were there. We launched the Industry Transformation Maps which will anchor many of their capabilities here – it is not just the semiconductor companies, but the ecosystem that we are attracting to be based here in Singapore. And as the Member mentioned earlier on, with regard to all of our free trade agreements that we have signed, we should make sure that we diversify as much as possible to prevent us from being affected by future shocks that will inevitably arise.