In a bid to keep Singapore's technological capabilities well-honed, the government plans to spend $1 billion on a national semiconductor R&D fabrication facility that will be equipped with industry-grade tools for researchers and industry partners to prototype and test new innovations. "This will further enhance Singapore's attractiveness in the semiconductor sector," says DBS Group Research in reaction to Budget 2025.
According to DBS, Singapore's semiconductor industry excels in advanced nodes of 7nm and above, but so-called mature nodes of less advanced generations, continue to play a significant role. The "most promising areas" are integrated device manufacturers (IDMs) and high-end outsourced assembly and test (OSAT) services, in which AEM Holdings has exposure to, says DBS.
In addition, the government is topping up $3 billion to the National Productivity Fund, which is used to give a leg up to tech-heavy industries such as medical technology and life sciences.
According to DBS, other local listed companies such as Venture Corp, Grand Venture Technology and Frencken Group are potential beneficiaries as they all have varying levels of exposure to these segments.
Grand Venture, for one, generates 20% of its revenue from the medtech and life sciences segments; Frencken derives 40% of its sales from the analytical services, life sciences, and medical technology sectors. Venture Corp, which does not give a detailed breakdown of its various customer segments, is known to acknowledge these sectors as "secular growth segment".
Interestingly, Venture Corp, whose business is to provide manufacturing services, has been named by the Ministry of Finance as a local partner to a US-based, Nasdaq-listed Illumina, which develops DNA sequencing and array-based life sciences technologies to enable research discovery. Illumina sells DNA sequencing systems, also known as DNA sequencers.
"In partnership with local enterprises such as Venture Corporation and Sunningdale Tech, the facility manufactures the full range of Illumina’s products, such as the MiniSeq and MiSeq i100 genome sequencing machines, as well as the consumables that are needed to operate them," states MOF in a separate release providing more information on companies cited by Prime Minister Lawrence Wong in his Budget speech. "These partnerships have helped Singapore’s local enterprises build new capabilities in innovation and expand into new industries," adds MOF.
Venture Corp is a leading Singapore Exchange -listed blue-chip manufacturer while Sunningdale Tech used to be listed here as well before it was privatised by a group of investors that included current SGX chairman Koh Boon Hwee.
In response to The Edge Singapore’s queries, a spokesperson from Venture Corp says its partnership with Illumina has spanned “over a decade”. “Over this time, we have consistently driven breakthroughs in new sequencing products through leveraging our expertise in R&D and manufacturing innovation.”
The partnership with Illumina has helped Venture expand beyond its existing domains and accelerate its growth in the life sciences industry, the spokesperson adds. “In parallel, Venture has developed advanced technology modules for precision control applications under its subsidiary... These modules help shorten [the] product development lead time."
RHB Bank Singapore’s Alfie Yeo is similarly upbeat on the impact of the Budget on the overall tech sector. “We believe that in the longer term, the announced measures supporting the manufacturing and technology sectors’ growth could benefit semiconductor and manufacturing-exposed stocks like Frencken Group and Venture Corporation,” he adds.
Furthermore, with the anticipated tech recovery into 2025, Yeo is keeping his ‘overweight’ call on the manufacturing and technology sector. As customers work down their inventories and the supply chain normalises, Yeo sees orders recovering in tandem with stronger customer demand.
“Stocks in both semiconductor and tech manufacturing are expected to benefit from the pick-up,” says Yeo, who has a “buy” call on Frencken along with a $1.71 target price, while Venture Corp is similarly rated “buy” along with a target price of $15.40.
