Mr Stanley Myers, President and CEO, SEMI

Mr George Lin, President, Asia-Pacific, SEMI

Ladies and Gentlemen

Good evening

It is my pleasure to be here today to officiate at the opening of SEMICON Singapore 2002, which marks the 10^th Anniversary of the SEMICON Show. For the past 10 years, the Show has served as an excellent platform for industry players to explore new opportunities arising from the latest developments in business trends and technologies. Its success attests to the vibrancy of the semiconductor industry in Singapore and the region. I want to congratulate SEMI on this happy occasion.

We hope that the year 2002 will mark the emergence of the semiconductor industry from one of its sharpest downturn in history. DRAM prices are recovering from their previous lows. Several semiconductor companies worldwide have reported better than expected results from the first quarter of 2002 while others have announced increases in capital expenditure. These naturally translate to good news for equipment makers, who will benefit from new equipment orders. I understand that this year’s SEMICON Singapore show will be one of the largest to date, with 780 booths and an expected attendance of over 10,000 trade visitors. This indicates that the semiconductor industry continues to be robust and exciting.

Of late, some people have questioned Singapore’s rationale for continuing to promote the semiconductor industry so strongly, when the global industry is inherently cyclical in nature and poses heavy demands on critical resources. Let me share with you some perspectives on these issues.

First, the semiconductor industry continues to offer high growth potential. Since 1970, it has grown nearly 50 times from US$3.5 billion to about US$170 billion last year. Analysts from research house Gartner expect this figure to increase to US$300 billion by 2005. Our strategy to develop this industry will allow us to stay ahead in the game and eventually secure in Singapore a sustainable and sizeable portion of this huge business.

Second, the manufacturing sector remains important to Singapore’s economy and wafer fabrication is a key part of this strategy. Semiconductor design and manufacturing are high value-added activities. By promoting the industry, we will generate the value-added necessary to fuel economic growth and at the same time create high quality employment in Singapore.

The semiconductor industry requires a consistent source of quality electricity and water, skilled manpower, strong logistics links and a base of supporting industries. Singapore is well positioned to meet these requirements. In addition, our stable and pro-business political structure protects the long-term investments in wafer fabs and test & assembly houses. The recent big projects that have been secured in Singapore are ample testimony to this. Last year UMCi, a JV between UMC, Infineon and EDB Investments, broke ground for its 12-inch fab which will start wafer production in the second quarter of 2003. Early this year, AMD and UMC announced that they would form a JV to own and operate a 12-inch fab in Singapore. Designed for the production of microprocessors, this facility will be operational in 2005.

Is it a big challenge grooming this industry in the face of rising competition? Sure it is! But Singapore is no stranger to this marathon race of always staying ahead of competition. We take a holistic approach in developing the semiconductor industry. This enables us to identify the promotion of semiconductor equipment and materials as essential ingredients to the success of the semiconductor industry.

The semiconductor industry in Singapore started some 30 years and today we have the entire value chain of activities. Singapore plays host to 32 IC design houses, 15 wafer fabs and 18 assembly and test facilities. We have national research centres with R&D programs complementing these semiconductor activities. For example the Institute of Microelectronics carry out research in Deep Submicron IC and advanced IC packaging.

Development of the semiconductor, and the equipment and materials industries must be undertaken in an integrated manner. To meet increasing demands of new and smaller applications, the size of transistor circuitry continues to shrink. Production of smaller chips requires more sophisticated automated tools and materials. While chip makers work on improving process technologies, more than ever they also need to work in close collaboration with equipment and materials companies to develop processes for next-generation devices.

Singapore boasts a sizeable semiconductor equipment cluster. MNCs such as ASM, Kulicke & Soffa, Agilent and Teradyne conduct a diverse range of activities here, from manufacturing, product development to headquarters functions. More recently, Electroglas from the US announced the move of its wafer prober line from the US to Singapore, with full production expected by 2003.

Apart from MNCs, Singapore also has a pool of established local players providing a comprehensive range of packaging solutions. Advanced Systems Automation, AEM-Evertech, Flextech and Manufacturing Integration Technology are some of the companies who continue to carve a niche for themselves by continually engaging in R&D and staying ahead. We will not relent in our efforts to help them become ‘local giants’ – homegrown companies with the resources and capabilities to extend their reach globally.

Our first wafer fab was started by STMicroelectronics in 1984. Today, we are host to 15 wafer fabrication plants and one liquid crystal display fabrication facility. To complement these wafer fab activities, we need to grow a wafer fab equipment industry. We will continue to encourage fab equipment companies to undertake higher value-added activities such as training, equipment refurbishment and assembly. With more fabs showing interest in doing their process R&D in Singapore, equipment vendors will also be encouraged to set up applications laboratories here and collaborate with the fabs as well as research institutes.

Recent announcements by UMCi and Chartered to bring forward their 12-inch wafer fab plans will have positive spin-offs to the equipment industry. We will continue to work hard in creating a conducive environment for semiconductor and related supporting industries. By investing heavily in manpower and world-class infrastructure, we believe the semiconductor and equipment & materials industries will continue to flourish in the years to come.

In conclusion, I once again congratulate SEMI Singapore Pte Ltd for its efforts in organising this important exhibition. I wish all of you a rewarding time at SEMICON Singapore 2002 over the next few days. Thank you.