In September 2009 Temasek Holdings, one of Singapore’s state-run investment funds, divested its 62 percent stake in a company called Chartered Semiconductor Manufacturing. Founded in 1987, Chartered was a key part of Singapore’s long-term ambition to gain a strategic foothold in global semiconductor and computer chip supply chains. To a large extent, the plan worked. By 2009 Singapore accounted for about 12 percent of global integrated circuit (IC) exports, and Chartered was the third largest semiconductor foundry in the world.
But it was also losing money and market share.
Singapore’s IC exports contracted by 13 percent from 2007 to 2009. Squeezed by intense global competition, particularly from Taiwan’s TSMC, Temasek decided to exit the position and sold its shares to UAE-backed GlobalFoundries for $1.8 billion. Given the firm’s operational challenges, there was a clear financial logic to the decision. But if Temasek had perfect foresight, they perhaps would have held their position a little longer. Within a few years the global semiconductor industry was primed for a resurgence in terms of profits and geopolitical significance.
GlobalFoundries, the firm that acquired Chartered in 2009, posted a net profit in 2023 of over $1 billion. It is one of the world’s top producers of semiconductors, and as a result occupies a key position on the global technological frontier.
According to Harvard’s Atlas of Economic Complexity (from which most of the data for this article is sourced), total global exports of integrated circuits were valued at $982 billion in 2021, the last year for which they maintain a complete dataset. Singapore still remains a significant player in the production and export of integrated circuits, but by 2021 its share of the global export market had fallen to 9 percent.
Why are integrated circuits such a hot topic these days? Mainly because the world runs on them.
ICs, which we commonly just call computer chips, are an essential component of virtually every type of electronic device, from microwaves to the most sophisticated artificial intelligence. Recent advances in high-level computing have accelerated the demand for processing power, and as a result control of IC supply chains has become very profitable and an area of global strategic competition. With the majority of production concentrated in the Asia-Pacific region, integrated circuits are acquiring ever greater currency as a geopolitical flashpoint, and this is creating a window of opportunity for countries that are eager to move up the value chain.