Breakingviews - Tiny Singapore's chip hub retains a big punch

HONG KONG/SINGAPORE, June 21 (Reuters Breakingviews) - Tiny Singapore is punching above its weight in global chipmaking. NXP Semiconductors and Vanguard International Semiconductor Corporation unveiledNew Tab, opens new tab plans this month to build a $7.8 billion factory in the city-state. It follows fresh investments from GlobalFoundries (GFS.O)New Tab, opens new tab, Micron Technology (MU.O)New Tab, opens new tab and others showcasing Singapore's expertise in the industry. Retaining that edge will soon get trickier.

While Taiwan dominates high-end chip-manufacturing, Singapore has carved out a slice of the global tech supply chain making low-end chips vital to electric cars, smartphones and more. Its highly-productive workforce, well-developed research and manufacturing infrastructure, and sophisticated logistics have helped boost semiconductor manufacturing to 7% of GDP. The government also supports the industry through friendly policies and tax breaks.

Today, Singapore accountsNew Tab, opens new tab for just over a tenth of global chip output and a fifth of semiconductor-equipment production; the city has emerged as the largest production hub outside the United States for U.S.-based firms including Applied Materials and Micron.

That makes Singapore a logical choice for NXP and Vanguard's joint venture. The new factory will produce 130 nanometer to 40 nm chips using technology TSMC develope...
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