Growth of Singapore’s electronics industry

As described elsewhere in this article, several East Asian countries outside Japan have emerged as major production platforms for the global electronics industry since the 1970s. Driven by global competition, firms from advanced countries in general and US and Japanese firms in particular have increasingly extended their supplier bases and production networks to the various countries in East Asia. In 1993, the four Asian NIEs, ASEAN, and China together already accounted for 13 percent of global electronics production, or about 40 percent of Japanese output With nearly all these countries achieving double-digit growth over the last three years and Japanese production stagnating, the share of non- Japan East Asian output in global production has increased substantially since then. Along with rapid expansion in output, there has also been a significant transformation in the nature of activities being carried in these countries.

This article focuses on one aspect of this changing structure of Asian production networks for the global electronics industry—the emergence and growth of Singapore as a major hub in South East Asia. By examining the dynamics of growth of Singapore’s electronics industry over the last three decades, this article seeks to provide new insights into the shifting patterns of competitive interactions between US and Japanese production networks. In particular, we argue that the rise of Singapore is largely due to its ability to leverage the competing but overlapping production networks of major US and Japanese electronics firms. It is this ability to “ride the waves” of technological and organizational changes emanating from the United States and Japan that enabled Singapore to differentiate itself from other competing locations in East Asia —the North Asian NIEs of Korea, Taiwan and Hong Kong as well as the Southeast Asian “tigers” of Malaysia and Thailand.

This article is organized as follows. The first section profiles the historical growth of Singapore’s electronics industry, highlighting a number of salient features that distinguish it from other competing locations in East Asia. The second section analyzes in more details the competing yet overlapping contributions of major US and Japanese firms to the development of Singapore’s electronics industry, and the salient differences in organizational characteristics and strategic orientations between US and Japanese operations in Singapore. The third section examines the recent emergence of indigenous electronics firms in Singapore and their changing roles in the US-Japan competitive nexus. Finally, the fourth section examines the contributing role of the state in promoting Singapore as a regional hub for electronics, and provides some concluding observations

concerning future directions of US-Japan competition in electronics, and their implications for Singapore in particular and Asian production networks in general.

The rapid growth of the electronics industry in Singapore

Since the late 1960s, when electronics firms from the United States and Japan first began to redistribute production to Asia, Singapore has been a major node in the production networks of the global electronics industry. Despite the continuous spreading of the US and Japanese production networks to other countries in East Asia in general and Southeast Asia in particular, Singapore has continued to maintain an eminent, though changing, position in Asia. Indeed, successive waves of investments by multinational corporations from the United States, Japan, and Europe have intensified Singapore’s integration into the global production networks of these firms. The aggregate electronics industry output reached S$63 billion in 1996, constituting over 52 percent of the total manufacturing output in Singapore, making it by far the largest industrial sector in Singapore today. Along with quantitative growth, Singapore’s electronics industry has also

undergone tremendous qualitative transformation. Between 1970 and 1995, the industry has moved from simple technology, labor-intensive operations to highly automated, skill-intensive operations, as reflected by an average increase in labor productivity of over 5 percent per year during the 25-year interval. Reflecting the significant rise in capital and technology intensities over the years, fixed asset per worker also increased dramatically  The qualitative transformation of the electronics industry can also be seen in the shifting sectoral composition of the industry over the years    Although consumer electronics and basic electronics component assembly and testing activities dominated in the earlier years, the growth of the industry over the last decade has been fueled mainly by the manufacturing of computer related products  and more advanced electronics component-manufacturing operations.