Thanks to the global semiconductor demand, experts said.
Singapore’s industrial production grew by 11.2% year-on-year (YoY) in August 2021, according to the latest Economic Development Board (EDB) report. Several experts pointed to a global semiconductor demand as the reason for this growth.
OCBC Treasury Research puts this performance on the strength of the electronics performance.
“August manufacturing output surprised on the side at 11.2% YoY (5.7% mom sa), aided by strong electronics performance (15.4% yoy). This is very close to our forecast of 11.3% YoY (7.2% mom sa), but higher than the Bloomberg consensus forecast of 8.2% yoy (3.1% mom sa). Nevertheless, it marked a moderation from July’s revised readings of 16.4% YoY (-2.8% mom sa),” OCBC said.
OCBC also stated that this performance was even strong enough to offset the weak biomedical cluster performance that had an output shrink of 0.6% YoY, after a steller 78.6% growth in July.
“Notably, the electronics cluster’s outperformance was underpinned by strong expansion in infocomm and consumer electronics (31.6% YoY), other electronics modules (24.6% YoY) and semiconductors (16.8% YoY). The latter is encouraging given recent news reports of chip shortages being attributed to factories being shut due to COVID outbreaks in Malaysia and Vietnam. Even the US is trying to get more data from US chipmakers to figure out who may be potentially hoarding supplies, so the global chip shortage issue has not been resolved and would be something to still watch going ahead,” it added.
For its part, UOB said that these clusters, the electronics and precision engineering, had strong performances due to strong global demand for semiconductor-related products
“Singapore’s electronics and precision engineering clusters remained to be the star performers on the back of strong global demand for semiconductor-related products. The precision engineering cluster rose 22.9% YoY, the fastest pace in three months. According to the media release by the EDB, the higher output of semiconductors and industrial processes equipment lifted the precision engineering cluster, while a strong uptick in semiconductor (+16.8% YoY) production supported the overall electronic segment.
UOB said, "The expansion in Singapore’s industrial production is also reinforced by a favourable export backdrop. Whilst non-oil domestic exports decelerated to a growth of 2.7% YoY (-3.6% m/m sa) in August 2021, it still marked the ninth straight month of expansion. Electronic exports rose 16.7% YoY in August 2021, led by shipments of semiconductor-related products such as integrated circuits, diodes, and transistors and disk drives. The positive global export backdrop seen to date is expected to buttress Singapore’s external-facing industries, while higher commodity prices may provide the fillip to overall export value for the year ahead."