Electronics firms get more selective - Singapore

Business Asia, Nov 2, 1998

Singapore not spared from crisis

Singapore's electronics companies are zeroing in on business areas that show the greatest potential for growth.

As Singapore's largest non-oil export, electronics accounted for roughly S$63 billion (US$37.6 billion) in earnings and 51 per cent of the country's manufacturing output last year -- a 4.1 per cent rise over the previous year.

Twelve of the world's 15 largest consumer electronics companies have a presence in Singapore.

Market investment commitments totalled S$3.9 billion last year, up 12 per cent over 1996.

Among the significant projects implemented last year was NEC Semiconductor's second-phase plant for the assembly and testing of advanced memory devices.

Singapore has not been spared the global turndown in the electronics sector, recording a 3.3 per cent drop year-on-year from January to July 1998 (over 1997). These figures are attributed to reduced production of PCs, disk drives, semiconductors, telecommunications products and consumer electronics.

Manufacturing commitments, however, amounted to S$8.9 billion in the first half of this year, almost S$1 billion of it in the electronics sector.

Not all companies manufacture or test in Singapore. Many use it as the base for their Asian marketing and management functions. Fortune 500 company NCR is one of them. The company recently relocated its Asia-Pacific headquarters from Tokyo, an indication of the company's faith in Singapore.

"Singapore was the (best) choice, not only because of its strategic location at the crossroads of South East Asia, but also because of its very well-developed financial infrastructure and telecommunications system," said Mr Hideh Takahashi, senior vice president of NCR's worldwide field operations.

Another company, ST Micro Electronics (formerly known as SGS-Thomson), has broken ground on its second water fabrication plant.

ST Micro's existing site was recently reorganised as the most energy-efficient plant in the world in a benchmarking exercise by US-based SemaTech.

These plants are not Singapore's only water fabrication plants.

New projects announced this year will bring the count to 11. They are a S$1 billion joint venture between Lucent Technologies Microelectronics and Chartered Semiconductor, and a S$1.2 billion joint venture between Philips Semiconductor, Taiwan Semiconductor Manufacturing Co and the Economic Development Board.

Like other local electronics companies, Canon Asia Pacific is holding its breath, waiting to see how the economics pan out in China and Malaysia.