Singapore warns U.S., EU chip subsidies will ‘drive up costs’

Despite its small size, Singapore produces 5 percent of the world’s semiconductor wafers.

Last year, Congress passed the CHIPS and Science Act, a law that pumps $52 billion into domestic chipmaking facilities and research labs. And in April the EU advanced its own Chips Act, which will funnel roughly $47 billion in subsidies to semiconductor firms that set up shop in Europe.

Koh suggested that neither the U.S. nor the EU possess the “complex ecosystems” required to support large-scale semiconductor operations.

“There’s a challenge of whether you have the competence, you have the trained personnel, et cetera,” he said. Koh cautioned that the subsidies could cause the world to “lose some of the benefits of economic scale and the digital revolution.”

Fahmi Fadzil, Malaysia’s communications and digital minister, broadly agreed with Koh’s assessment of Western chip subsidies. Malaysia also has an outsized footprint on global semiconductor production.

Both Singapore and Malaysia subsidize semiconductor companies that operate in their countries. Singapore, in particular, offers a wide range of incentives to chip firms. The southeast Asian city-state is reportedly trying to lure the Taiwan Semiconductor Manufacturing Company to its shores through substantial new subsidies.