2 Coincidentally, Minister George Yeo is opening Wacker Siltronic’s wafer producing plant in Tampines this morning.

3 These two projects are closely related. The Wacker plant will produce silicon wafers, which serve as the raw material for integrated circuit (IC) fabrication activities. By adopting a cluster approach to developing industries in Singapore, we are able to create synergy among the companies in the same industry operating here.

4 The semiconductor industry is part of the knowledge-based economy that we are building. The industry accounted for about 2% of Singapore’s GDP last year. Total output was about $14 billion. There are currently 40 semiconductor companies involved in wafer fabrication, assembly and test, and IC design activities; and another 160 companies supporting this knowledge-intensive industry.

5 The global semiconductor market is a big growth area. In 1999, it chalked up a record sale of US$150 billion. Industry experts expect this market to grow by 25% annually over the next two years. Singapore can benefit from the continuing electronics boom.

6 But the competition in the semiconductor industry is intense and relentless. To be on top of the competition, Singapore will have to do more than expanding capacities and cutting cost. Singapore companies must offer cost-effective leading-edge process technologies to their customers. In this regard, I would encourage our companies to consider teaming up with key industry innovators wherever possible, to bring advanced manufacturing processes and services to the market. They may also want to collaborate with the Institute of Microelectronics and our universities to address technology issues, while using these relationships as a way to train a new generation of leaders for Singapore’s semiconductor industry.

7 To support the growth of our industry, steps will also be taken to ensure a sufficient pool of quality manpower. For example, EDB launched the Specialist Manpower Programme in 1995 and a second phase in 1998 to encourage polytechnic and university students to pursue careers in the semiconductor field. These training programmes have produced some 1,200 professionals. Another 3,000 engineers will be trained over the next three years to meet the semiconductor industry's requirement. EDB will also work with semiconductor companies to recruit foreign talent from overseas to meet future needs for skilled labour.

8 In addition, Singapore prides itself on providing good infrastructure to companies and businesses. This is a key factor in our ability to attract high-tech companies like Wacker, Hitachi and Shell to locate their manufacturing operations here. Our power quality is already amongst the best in the world. However, this is not good enough for the many high-tech companies which have invested in Singapore as they have equipment which are very sensitive to voltage dips. Even though such dips cannot be totally eradicated, we must reduce them to the fullest extent possible in order to provide the highest standard of power quality for our high-tech customers. We have amended our laws to penalise those who damage our underground cables causing such dips. We will go beyond this. PUB will set power quality standards in consultation with the industry for compliance by the public licensees. For areas where our high-tech industries are located, such as Jurong Island, Woodlands and Tampines, PUB will work with EDB and PowerGrid to implement a scheme to provide premium power quality to meet the needs of industry. While this scheme will come at a higher cost to the users, it will help to reduce the number of power dips. We will also assist companies by co-sharing this cost. The scheme is expected to be completed in 2002.

9 Globalisation is the current buzzword internationally. It means an increasingly inter-connected and borderless world. In such a world, it is not possible to protect companies from international competition.

10 We accept this as a reality. We do not lament over the pain and costs of globalisation. Instead, we have taken a robust approach. Singapore’s response is to speed up the liberalisation of the key economic sectors, for example, banking and telecommunications. We believe that for local companies to succeed in a global economy, they must pass the international market test, not a protected local market test.

11 We are, of course, very concerned that local players may be totally overwhelmed by their bigger and stronger foreign competitors. But protectionistic measures do not produce strong adults, as the infant industry measures have shown everywhere. Sheltering local companies from international competition will in fact harm them and retard their development and growth. It is far better to help local companies in practical ways, for example, by assisting them in training, technology development and market building.

12 The success of home grown Chartered Semiconductor Manufacturing (Chartered) shows that such an approach is right. Today, Chartered is the world’s 3^rd largest pure-play foundry in a highly competitive and fast-moving industry. In November last year, Chartered was the first local Semiconductor Company to be dually listed on NASDAQ and the Singapore Stock Exchange.

13 Besides Chartered, a small number of other local companies have also become global players. There are useful lessons to be learned from their success. A key factor is adopting the right business approach. Their strategy can be summed up in the following words: Focus, Think Big and Take Risk.

14 To focus is to identify the right niche for the business. Singapore companies stand little chance if they compete on a broad front with the giants from the developed world. Given their resource limitations, Singapore companies have to develop core capabilities in niche areas. They have to capitalise on specialised knowledge, adaptability and closeness to market to become leaders in their chosen niche. This is exactly what Creative Technology has done in the area of multimedia software and Natsteel Electronics in contract manufacturing.

15 Next, to think big means having a global market vision. Having a share of the global market will provide the economy of scale so necessary to support the high cost of new product development, continual product improvement and market development. Chartered is a good example of this "think big" approach.

16 Finally, while taking risk is part and parcel of any business, the willingness to do so should not be taken for granted. Betting on the future is tricky and risky for companies both big and small, especially in today’s context of rapid and discontinuous change. But Singapore companies must do their sums, exercise their business judgement and take the calculated risk. Only then will their business ideas and vision see the light of day. At the next stage of our economic development, entrepreneurship will provide the engine of growth. Our society and people must accept failure as normal in the journey to success. Unless we encourage our innovators and companies to keep on trying, they can never find the pot of gold at the end of the rainbow.

17 To conclude, l want to congratulate the Chartered team and wish them much success. I hope your success will inspire other local companies to become global players in their chosen fields.

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