Semiconductors' 32.4% growth powers Singapore manufacturing through June

One-third of surveyed electronics executives project a positive business situation through June.

Singapore’s manufacturers remain cautiously optimistic this year, with 63% expecting business conditions to be stable from January to June 2026.

The Economic Development Board’s (EDB) latest Business Expectations Survey also saw that 24% expect improved business outlook and 13% expect weaker business prospects. This translates to a net weighted balance of 11% of manufacturing firms projecting a better business situation in the first half of 2026.

In the first quarter alone, 6% of manufacturers expect an increase in output. All except the chemicals and general manufacturing industries cluster project a higher level of production.

Singapore’s manufacturing output grew 8.3% in December 2025, thanks to strong gains in electronics and transport engineering.

The electronics sector, specifically, expanded 30.8%, driven by a 32.4% increase in semiconductor production amidst sustained demand for artificial intelligence-related products. Overall, the cluster grew 12.7% in 2025 compared to 2024.

The city-state’s Purchasing Managers’ Index (PMI) also rose by just 0.1 points month on month to 50.3 points in December 2025. This marks the fifth consecutive month of growth for the manufacturing sector.

EDB said the electronics cluster is the most optimistic, with 33% predicting a positive business outlook in the next six months.

“This upbeat sentiment is largely driven by the semiconductors segment, on the back of sustained artificial intelligence (AI)-related demand, despite concerns over trade tensions and US tariffs,” EDB said.

Meanwhile, 10% of firms in the transport engineering cluster expect favourable business prospects, thanks to the continued strong demand for aircraft maintenance, repair and overhaul services in the aerospace segment.

In the biomedical manufacturing cluster, 8% of firms are optimistic about the operating environment in the first half of 2026. This optimism is led by the pharmaceuticals segment, on expectations of higher exports.

For the chemicals cluster, 17% expect a weaker business outlook in the next six months.

“The subdued sentiment stems mainly from the petroleum segment, where firms expressed concerns over macroeconomic uncertainties weighing on refining product demand and margins,” EDB said.