By Chua Hian Hou

WHILE Singapore's semiconductor industry has been hard-hit by the economic downturn, its long-term prospects are good - and the Government is signalling its continued support by pumping $16 million into post-graduate scholarships.

The Republic's 60 semiconductor companies produce nearly 11 per cent of the world's computer chips, providing jobs for 40,000 workers in Singapore.

Mr Damian Chan, the Economic Development Board's (EDB) director for electronics, said the sector last year contributed $7.8 billion, or 3.2 per cent, of Singapore's gross domestic product.

The number was down from an average contribution of 4.1 per cent in the three years before that, primarily due to lower orders during the final quarter of last year.

Mr Chan said despite its current problems, Singapore's semiconductor sector had been showing signs of a recovery over the last two months.

The sector's prospects in the longer term remained solid, thanks to the world's insatiable appetite for everything requiring computer chips - from mobile phones to X-ray machines and cars, he said.

Mr Chan declined to say how he thought the industry would do this year, but he noted that an export-oriented sector like semiconductor manufacturing could not 'significantly do better than the rest of the world'.

Analyst group Gartner estimates semiconductor sales will fall by 24 per cent globally this year, while another firm, Semico Research, expects a drop of 13.9 per cent.

Given the importance of this consistent contributor, Mr Chan said there was a need to ensure Singapore would have the manpower to keep the sector humming despite the downturn.

Such talent will also be necessary if the Republic wants to attract new investments in promising new areas, such as green electronics and biomedical electronics, when the global economy recovers, he said.

This is why the EDB will launch today a new $16 million scholarship programme to train 150 integrated circuit design experts over the next five years, the first time the agency is offering a full sponsorship.

The programme will fund master and higher-level studies at the National University of Singapore (NUS) and the Nanyang Technological University. Candidates who accept will have to work here for two to three years.

The programme, according to integrated circuit design firm MediaTek's senior adviser, Dr Tan Khen Sang, will get rid of some of the funding and uncertainty issues the industry is facing now.

Because of the current uncertainty, many companies are hesitant to invest in long-term projects like scholarships that only pay off years later, said Dr Tan.

MediaTek, the world's No. 5 fabless integrated design firm, has more than 100 staff in Singapore, most of whom are involved in research and development work. More than half of the firm's 4,000 employees globally have advanced engineering degrees. Fabless companies like MediaTek design chips and then subcontract the manufacturing to other companies.

The move, said NUS' electrical and computer engineering head, Professor Lawrence Wong, encourages more students to pursue research careers in integrated circuit design and strengthen Singapore's knowledge and innovation capabilities and competitiveness.

News of the scholarship programme is heartening to electrical engineer James Tan, 29.

'This year, it seems that there has been nothing but bad news about electronics companies retrenching or freezing pay. So it's good to hear that the Government is still behind the industry... and $16 million is a strong vote of confidence,' he said.

This article was first published in The Straits Times.