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How does the projectile maintain its industrial ambitions?

If you refer to Singapore, those who are familiar with the Internet economy will first think of Temasek, its state-owned capital group. It is known for never missing out on investment opportunities in Chinese technology and Internet companies. In the past decade, it has invested in a large number of Chinese Internet companies including Ali Tencent.

However, few people may notice that Singapore Chartered Semiconductor (CSM), once the world’s third largest foundry, was once a wholly-owned subsidiary of Temasek. Chartered Semiconductor is a business card for Singapore’s advanced manufacturing industry. Temasek maintains a very close relationship with Singaporean leaders and owns and manages over $300 billion in assets. It can be argued that in the past few decades, Singapore’s semiconductor industry has emerged, and the government’s industrial policies promoted through Temasek are inextricably linked.

In 2018, manufacturing accounted for 20% of GDP in Singapore, and the electronics industry accounted for about 50%. In contrast, the total value of Hong Kong’s secondary industry in the same period only accounted for 7.6% of its GDP. The semiconductor industry has brought enough sustainable development momentum to Singapore in terms of employment, research and import and export. However, the changes and restructuring of the global economic structure have brought various uncertainties to the city. Its policy in advanced manufacturing has provided a reference for the development of China’s manufacturing industry. Future changes and trends may also serve as a reference.

During the 11th holiday, the author visited some of Singapore’s innovative incubators and smart manufacturing companies. The following are observations and reflections on its advanced manufacturing industry.

was once the object of learning in China

On the Singapore Pan Island Expressway, it was a bit of a surprise to see the signature signs of these famous technology companies from Qualcomm, Toshiba, Infineon and Siemens appearing in close neighboring buildings. They can stand in Singapore and benefit from the country’s development policy. The first of these can be traced back to the independence of 1965, the Singapore government has a forward-looking national policy to develop the semiconductor foundry industry, in order to attract investment and employment, and develop trade. One of the policies is to adopt various preferential policies to promote investment attraction in Jurong Industrial Park in the southern part of Singapore Island.

It is worth mentioning that Singapore’s manufacturing industry was once the object of imitation and learning in China. The industrial park model across China was first copied from Jurong Industrial Park. The famous Suzhou Industrial Park is the result of the experience of Jurong Industrial Park transplanted to mainland China. In addition, through the large state-owned capital investment such as Temasek to guide the development of the industry, this model has also been used in China in recent years. One of them is the first phase of the famous National Integrated Circuit Industry Investment Fund Co., Ltd. (the “National Big Fund”), which has raised more than 130 billion people.In the five years since its establishment, the company has invested about 500 billion yuan in social investment in the semiconductor industry.

Returning to Jurong Industrial Park, it has attracted dozens of global semiconductor companies, making Singapore one of the world’s semiconductor centers, with hundreds of semiconductor companies, chip design, foundry and A full-factor industrial chain of a series of chip production, such as packaging and testing. Its products are mainly used for export.

In 2009, Singapore’s semiconductor industry accounted for 11.2% of the global semiconductor industry, and also the birth of two major star companies in the local semiconductor industry: Chartered Semiconductor and Star Peng Technology. The latter is also controlled by Temasek, which was ranked fifth in the global packaging and testing industry.

This performance should be said to be very good compared to Singapore’s 5.6 million population and 719.1 square kilometers of territory. It is impossible to hire hundreds of thousands of employees to create mobile phones like Foxconn. So, the high value-added semiconductor parts of the foundry will be a good part of the global industrial chain.

After 2008, the global semiconductor industry chain division has been adjusted, mainly in China’s investment in the semiconductor industry and R & D strength, Singapore’s comparative advantages in financing, research and manpower. The gradual withdrawal of local companies marks that between 2009 and 2016, Temasek sold the Chartered Semiconductor to the ATIC Investment Group ATIC, which was merged into Grofund, the world’s second-largest chip foundry. Starpeng Technology was sold to China’s Changjiang Electronics Technology. Temasek then adjusted its investment strategy. Its investment in the TMT industry remained at 25% of its total investment in 2016. However, by 2019, it is expected to fall to 20%, and the investment focus will shift to areas such as financial technology.

But for foreign investors, Singapore has not changed substantially in the center of the semiconductor industry in Southeast Asia. There are still a number of foreign foundries and many Asia Pacific headquarters of TMT companies. US semiconductor companies rely on Singapore to provide foundry services to Chinese TMT companies. Well-known companies include parts and OEMs for Huawei and Flextronics. In 2017, Micron’s new foundry in Singapore has been completed, enabling it to circumvent relevant policies and continue to supply Huawei.

However, global trade frictions have intensified in the last two years, and the global semiconductor industry has been in recession since the second half of 2018 – IHS Markit expects global semiconductor industry revenues to fall by nearly 13% in 2019 – making Singapore The semiconductor trade has been affected to a considerable extent, which has affected the development of the entire semiconductor industry.

The Singapore electronics manufacturing industry experienced a large degree of turmoil in 2018 and 2019, resulting in a sudden increase in the market size (Total Market Size).

Unit: Million Dollars Source: Singapore Bureau of Statistics

Small market, trade-oriented Singapore, is extremely sensitive to the turmoil in the global electronics/semiconductor market. Exports of electronic products in 2018 fell by 23.6%, directly causing a surge in inventories. Therefore, it needs to find another way to find the transformation path of advanced manufacturing on the original basis.

Transformation Strategy: Industry 4.0?

Since the environment is stable, Singapore has a consistent continuity in industrial development policies without any change. After the sale of Chartered Semiconductor and Starpeng Technology, the importance of the semiconductor foundry business has decreased, but Singapore’s accumulation of ICT technology has enabled it to expand the advanced manufacturing industry. This continuation is reflected in the Future Manufacturing Initiative proposed by the Singapore Science and Technology Development Authority (A*STAR) in 2015.

This is not a complicated initiative. It proposes to maintain Singapore’s manufacturing output at around 20% of GDP by 2020 (one fell below 20% in 2016). The main practice is through incubation technology and technology business. To improve the manufacturing efficiency of the company, thus maintaining the profitability and leadership of the manufacturing industry. The so-called “incubation”, in short, is the “digitalization” of manufacturing, which is familiar to people, and can also be called “intelligence.”

In this area, the Singapore Science and Technology Development Agency mainly adopts the practice of walking on two legs. On the one hand, the official adoption of the PPP model (government and social capital cooperation model) in terms of talent and technology incubation. The Advanced Remanufacturing and Technology Center (ARTC), established by the government and Nanyang Technological University, is the product of this collaborative model. The government provides funds, ARTC absorbs corporate members, and connects with Nanyang Polytechnic’s technology team to develop practical technology products from commercial needs.

The head of the ARTC Center stated that the center currently has a total of more than 400 projects developed, with an average incubation time of approximately half a year. The incubation programs seen at ARTC’s pilot plant include VR labs, intelligent robots, and 3D printing. At the same time, the pilot plant is also trying to promote various advanced production solutions. One of the attempts is to integrate and classify all machine data and transmit it to the mobile terminal via wireless network. “The entire factory can be monitored with an iPad or a smart phone.” An engineer at the scene told the media.

ARTC pilot factory monitoring room, real-time data of various industrial robots on the display, and ready to introduce 5G network to enhance the interaction between robots. Image source: The author of this article shoots

On the other hand, the Science and Technology Development Agency is introducing a strong foreign aid, the famous German “Industry 4.0” concept to achieve technological upgrading. In fact, from the experimental plant of ARTC, we can see the characteristics of “Industry 4.0”: realize the intelligentization of manufacturing industry through digital transformation. In October 2018, the Hannover Industrial Exhibition in Germany, which proposed the concept of “Industry 4.0”, held the first Asian exhibition with the Singapore Industrial Exhibition (ITAP). The exhibition will be held again in late October 2019, and Microsoft companies will participate.

According to Hannover’s Governor of Lower Saxony, Steven Weir, the media explained that Lower Saxony is close to Singapore’s population and has a large number of SMEs and a well-developed manufacturing industry. The intelligent manufacturing concept of “Industry 4.0” is suitable for landing in Singapore. After the introduction of the “Industry 4.0” concept for the first time in 2018, Siemens established the Industry 4.0 laboratory in Singapore, where McKinsey also established a pilot plant similar to ARTC to increase its understanding of Industry 4.0 commercial landing. More companies are still following up.

So far, Industry 4.0 is still a vague concept in technology. Its progress is difficult to measure by specific criteria. Any production system that achieves a certain degree of digitization and intelligence can be called “Industry 4.0.” ABB’s showroom in Singapore’s smart manufacturing company has the most direct case: a cigarette-sized sensor is mounted on a motor to instantly correlate the motor’s various data (vibration frequency, current) Pressure, rotation speed, etc.) are uploaded to the data center. Based on data analysis, the center predicts motor operating efficiency, maintenance and operating costs, and gives better operational recommendations.

The motor on display in the ABB showroom, the white part on the left is the ABB sensor. Image source: The author of this article shoots

This collaborative approach will result in a change in business model for manufacturing companies. ABB not only provides customers with hardware facilities, but also provides solutions to customers and increasingly relies on the latter to provide profitability. The company’s employees indicated that they would not charge for the sensor itself. However, in the long run, a certain service fee will be charged as a stable source of income.

Southeast Asia will become the market of Industry 4.0

However, with Singapore’s current small market and limited human resources, the development of advanced manufacturing in its own place is a dojo in the snail shell, lacking room for development. It must find opportunities to the surrounding markets, and “Industry 4.0” itself is a good business card – in this sense, the cooperation between Singapore and Germany in this concept is more commercial than its technical significance. .

In 2018, due to the decline in global trade growth, especially the dispute between China and the United States in the semiconductor field, the export of semiconductor parts in Singapore was affected. However, one of the effects of trade friction is to accelerate the transfer of some low-end industries to Southeast Asia, especially in Vietnam. But this is not a good thing for Singapore. At the informal discussion of “Industry 4.0” in Singapore, a person from an industrial NGO in Vietnam said that Vietnam has undertaken many low-end industries, but there are still many problems in how to promote these industries. “Industry 4.0 will bring great development opportunities for Vietnam’s industrial upgrading.”

This means that Singapore is complementary to neighboring countries and regions in the development of smart manufacturing, and it can derive commercial benefits through output technologies and solutions.

But even if it cooperates with Germany to carry out the digital upgrade of “Industry 4.0”, can Singapore gain more profits in technology and service exports, thus achieving export transcendence to the original semiconductor industry? The answer to this question is still relatively vague.

Because the degree of integration in the Southeast Asian market is different, the degree of progress in infrastructure construction varies, and the implementation of smart manufacturing in this region will be a long process. In addition, there are some technologies that need to be considered in many aspects when they are commercialized. For example, a technician at ABB said that many companies still don’t trust cloud services and are reluctant to put data on the cloud. All parties need to coordinate in many aspects in information security, and they need to be promoted in data security legislation.

ABB’s coffee robot. It is not difficult to build a single one. The hard part is how to enhance its commercial value. Image source: The author of the article filmed

How do you view the Singapore Industry 4.0 concept from the perspective of China?

Technically, China’s smart manufacturing benefits from the “National Chess” good infrastructure and huge market, with more development opportunities. Artificial intelligence, big data and cloud computing are not new concepts in China. It is also unlikely that Singapore will provide one-stop manufacturing upgrade experience as it used to. However, in terms of commercial development and cooperation, how to connect with foreign advanced manufacturing models and jointly develop the market, perhaps the Singapore model is available for reference.