Written by Jackson Teh
Semiconductor’s importance in Singapore and Taiwan
There is no doubt that the Covid-19 pandemic has negatively affected all countries globally, some more than others. While some countries are on the road to recovery in 2022, others are still struggling with the Omicron wave.
The coronavirus has taken a large hit on global supply chains and global manufacturing. Global centres of semiconductor production, such as Singapore and Taiwan, have been especially affected by the pandemic. Apart from this, both countries share other similarities, too: they rely on a large number of foreign migrant labour for their manufacturing and semiconductor industry, they experienced a major Covid-19 outbreak among Migrant Workers’ (MW) dormitories, and both have high export-oriented value-added economies with semiconductors being a major driver. Comparing the varying fates of Taiwan’s and Singapore’s semiconductor production in the era of COVID-19 can thus help us understand how the global economy responded to such an unprecedented shock.
Singapore has always had an export-oriented economy since independence, and more so in recent years. As of May 2022, Singapore takes up 11% of the global semiconductor market share by manufacturing 20% of the semiconductor equipment. Moreover, the semiconductor industry is poised for further growth, with around 2,000 more jobs expected to be created in the next 3 to 5 years as it is riding on the current supply chain and chips’ global shortage. The predicted trajectory would have been even more positive had it not been for the pandemic, and precisely because of the pandemic, there is a great push to reduce reliance on MW and foreign labour in general, to continue mechanising and replace human capital with efficient physical capital wherever possible in case such a crisis happens again.
Semiconductors play an even greater role in Taiwan’s economy than in Singapore. Taiwan Semiconductor Manufacturing Co. (TSMC), the island and world’s top player, is projected to boost their share in the foundry business by two percentage points from 2021. TSMC, the world’s largest contract chipmaker, will expand its three-point share to 56%. According to the Nikkei report, Taiwan is expected to host 44% of global foundry capacity in 2025, rising to a 58% share for advanced chips.
Singapore’s Covid-19 outbreak in Migrant Workers’ Dormitories and her response
Despite the Ministry of Health’s (MOH) best efforts to set up a larger number of isolation rooms for her MW population since the first case was detected on February 8 2020, Singapore still saw an outbreak in the MW dormitories. According to data, since the onset of this pandemic, until the Omicron wave took over, MWs have accounted for almost 90% of the over 70,000 cases confirmed in Singapore. The first wave of patients in early 2020 caused the government to put all dormitories on “lockdown”, restricting the movement of nearly 300,000 workers. This eventually extended to the Circuit Breaker, a stay-at-home order for the entire nation for almost two months in April 2020.
With over 15,000 infection cases among workers living in the dormitories from the end of April 2020 to May, the number continued to escalate to 33,000 in June. By the end of last year, over 175,000 out of 323,000 dormitory residents had caught the virus; fortunately, only twenty-seven deaths were recorded from the enormous dormitory population. Furthermore, in a study published in 2020 about the general public’s response towards the government measures, the majority were supportive and agreeable of the Circuit Breaker and, although tough, had endured and cooperated.
Of course, this would not have been possible without the complementary help of Non-Government Organisations (NGOs), who lend a helping hand to care for the MWs locked down within their dormitories. An example would be the informal group consisting of volunteers from Geylang Adventures, ItsRainingRaincoats, Singapore Migrant Friends and Migrant X Me, which has been distributing lunch and dinner packs to the MWs during the lockdown. These grassroots organisations serve as important emotional support in times of need and also assuage fears and uncertainty in the MWs’ minds.
Prevention is better than cure; lockdowns cannot last forever. Thus, a highly vaccinated and reliably boosted population will be the best way out of the pandemic. Since the first cases in 2020, Singapore has been aggressive in procuring vaccines for her people, both the general public and the MW community. Only when the overall population can the Singapore economy “ride the recovery” with the rest of the world.
Taiwan’s Covid-19 outbreak in Migrant Workers’ Dormitories and her response
Retrospectively, Taiwan has been hailed as the better candidate of the two countries in terms of her fast response early in the pandemic. When cases first emerged from Wuhan, China, Taiwan’s government sprung into swift action and set up the Central Epidemic Command Centre (CECC) as a central command brain for the whole Covid-19 response.
But the early low cases brought about complacency. Local citizens were reluctant to take the vaccines, although the number of vaccines procured was already far lesser than in Singapore, to begin with. As a result, as of December 31, 2021, 67.7% of Taiwan’s population has been fully vaccinated, compared to Singapore’s 88% in the same period.
Considering Taiwan’s comparatively lower vaccination rates and scarcity of vaccines during May 2021, any initiative of prioritising MWs for vaccination, even if well-intentioned, will face opposition. Prioritising vaccinations for MWs will thus not be politically popular with the public back then. To this end, public sentiments and faith in government measures are important to ensure measurements can be obeyed and reach their intended effectiveness. Therefore, the government needs to get the public on its side.
Another infection wave hit Taiwan from mid-May to mid-July 2021, causing over 14,000 infection cases. Some of the migrant worker dormitories were also reported to be clustered lists; these tech companies based in Miaoli County were 1) King Yuan Electronics Co., 2) Greatek Electronics Inc., and 3) Accton Technology Corp. Local government had imposed limited mobilisation on migrant workers’ from 7th to 28th June 2021.
It also does not help that the living conditions of some of the Taiwan MW dormitories are squalid. Many MWs lived in small beds crowded like canned sardines, with some even living in container houses. Nevertheless, the Taiwan Ministry of Labour announced that among the 1,168 MW accommodations inspected, 943 were “in compliance with the guidelines” for epidemic prevention, and 225 were “to be improved”. Not only does this pose as a biohazard for potential Covid cluster outbreak, but it also demoralises the MWs.
Just like in Singapore, there are many NGO efforts to care for the MWs. An example would be the Carefree Covid-19 Vaccination Programme. This project has more than 20 NGOs coming together to provide undocumented (illegal) MWs free vaccination without reporting, investigation, and immediate deportation. In addition, exhibits by 15 NGOs invited by the National Human Rights Museum’s Special Exhibition on the Human Rights of Migrants also raise overall awareness of human rights in society and protect the interests and well-being of MWs. Initiatives like these assure MWs’ mental well-being during such tough times.
Economic Impacts caused by outbreaks in MW community
Luckily for both Taiwan and Singapore, the economic impact of the MW outbreak was cushioned by the strong global chip demand (again, because of the pandemic and work-from-home measures). In 2021, the semiconductor and Integrated Circuit (IC) industry performed well, but it could have been even better.
Singapore’s Index of Industrial Production (IIP) of semiconductors fell, and all manufacturing sectors saw a dip between Q2 and Q3 of 2020, a combination of factors caused by the Circuit Breaker (lockdown) in public, as well as the outbreak in MW dormitories. The rest of the manufacturing sectors all saw a dip of up to forty points between Q2 2020 and Q4 2020 (both graphs below). Of course, this is not solely caused by the MW dormitories’ outbreak, but it certainly did not help.
For Taiwan, the Taiwan Semiconductor Industry Association (TSIA) reported a drop in growth from Q3 2021 to Q4 2021. This was mainly due to the outbreak in the MW community around June 2021, which caused Q4 output to slump, adjusting for the time lag.
For both Singapore and Taiwan, authorities must reflect in retrospect. As Omicron will not be the last variant we experience, nor Covid-19 the last pandemic, it is always good to introspect on our past so that hubris is not repeated.
Key Takeaways and The Way Forward
Firstly, global semiconductor investment will likely remain stable, supported by the rising demand for 5G and the automotive industries. The current supply chain issue may gradually ease as chipmakers expand factories. Taiwan and Singapore should seize this opportunity to expand production and ride the recovery by fulfilling global demand.
Secondly, swift lockdowns, movement and travel restrictions were effective in the initial stages of the pandemic, but they cannot last forever without impunity. As variants become increasingly virulent and decreasingly lethal, a vaccinated population is the way forward.
Next, public sentiments and satisfaction towards their government and faith in policy measures are essential for an effective fight against Covid-19. Good policies cannot be executed if the public disagrees and refuses to cooperate. On the same note, psychological morale, and mental well-being of the citizen and MWs population is equally vital.
Fourthly, with Taiwan being the more major semiconductor exporter among the two in our comparison, if today’s Covid-19 situation were swapped: Taiwan has 95% vaccination and is well on recovery, and Singapore is coping with another Omicron surge, this version of “reality” would be better for the global supply chain.
In crux, we should note the link between the general public’s health, both physically and mentally, with that of the MWs: only when local community cases are stable, and their sentiments positive, are MWs allowed to move around and go to work; only when MWs move around and go to work, can they feel better and hopeful about themselves and the future. Therefore, the mental well-being of both groups in a country must not be seen as isolated variables.
Jackson Teh graduated with a Master of Science (MSc) in Applied Economics from Nanyang Technological University (NTU), Singapore. He has since been working there as a Research Associate. Apart from research, Jackson is also an Associate Lecturer, teaching Finance and Economics at NTU, the Singapore University of Social Sciences (SUSS) and the Singapore Institute of Management (SIM). He is also the Manager at the Journal Editorial Office of The Singapore Economic Review, a Social Sciences Citation Indexed (SSCI) Journal of Economics.