Mr S Iswaran at the Opening of KLA-Tencor's New Facility

SPEECH BY Mr S iswaran, SENIOR MINISTER of state FOR trade and industry, AT THE Opening of KLA-Tencor’s New Facility at 4 Serangoon North Avenue 5 on 16 may 2008 at 4 pm

Mr. Rick Wallace,

Chief Executive Officer, KLA-Tencor Corporation

Mr. Dan Lee,

President, KLA-Tencor Singapore Pte Ltd

Mr. Theo Kneepkens

Vice President, Asia Operations, KLA-Tencor Singapore Pte Ltd

Ladies and Gentlemen,

Good afternoon.

I am very pleased to be here this afternoon, for the opening of KLA-Tencor’s new facility in Singapore.KLA-Tencor is the world leader in process control and yield management solutions for the semiconductor and micro-electronics industry.Today’s opening is significant as this state-of-the-art facility will house KLA-Tencor’s manufacturing hub in Asia, as well as a global training centre and other headquarters activities.

Singapore: A Competitive Location for Complex Manufacturing

In an increasingly digital world, more and more chips are being used in everything from automobiles to phones to music players.KLA-Tencor’s equipment enables semiconductor manufacturers to reduce the number of defects that occur in the manufacturing process, and enhance the yield from expensive wafers. For example, one of KLA-Tencor’s flagship products, the wafer inspection tool, which is currently being manufactured here, is engineered to identify defects whose dimensions are in tens of nano-meters.I am told that this scale is comparable in magnitude to spotting a strand of white hair on the ground from a height of about 2,000 feet, or about four times the height of the Singapore Flyer!Not only is this project the first-of-its-kind for Singapore; it is also KLA-Tencor’s first manufacturing facility in Asia with the precision engineering capabilities to build such advanced equipment.

Precision Engineering (PE) is a key enabler of Singapore’s competitive advantage in manufacturing.In 2007, the PE industry contributed $23 billion to manufacturing output and $7 billion in value-Added. It employed some 99,000 people. PE is the backbone of many manufacturing activities in industries such as hard disk drives, semiconductor equipment, machine tools, aerospace, medical devices, as well as oil & gas equipment.

PE will become even more significant as we strengthen our existing industry clusters and explore new growth industries.Earlier this year, Oerlikon announced plans to set up a solar equipment manufacturing and R&D hub in Singapore.And just last month, Panasonic announced the transfer of the manufacturing of its latest top-of-the-range electronics assembly equipment, based on Surface Mount Technology, to Singapore.Our local PE companies have also grown in tandem to match the increasing levels of sophistication and complexity in the industry. They have evolved from being simple contract manufacturers to become solution providers with strong design, prototyping, production and supply chain management capabilities.

Growth Strategies

Singapore is thus committed to growing and deepening our PE industry.This new facility is an excellent example that demonstrates Singapore’s efforts to transform our manufacturing base into a capital, knowledge and innovation intensive one.To achieve this, we are intensifying our efforts in 3 main areas:

Research & Development (R&D)

First, Research and Development. Singapore offers PE companies the opportunity to work together with our Research Institutes and Universities to develop new technologies, capabilities and products. Many companies have successfully tapped on the capabilities of these research centres to stretch their R&D dollar and augment their R&D talent pool. We have also put in place a robust intellectual property protection regime to strengthen our R&D environment, and sustain value creation.We shall continue to strengthen our R&D capabilities to address the needs of the industry, and our goal is for Singapore’s research spending to reach 3% of GDP by 2010.

Manpower Development

Next is in the area of Manpower Development. In order to meet the challenges of tomorrow, we will continue to focus on manpower training and development. For example, we are sponsoring 900 final-year engineering students in our local universities to go through specialist training in semiconductor fabrication.In 2007, we launched a $76 million sponsorship programme in Precision Engineering. This programme aims to equip up to 2,000 students with the skills needed to capitalize on new opportunities in areas such as equipment manufacturing and ultra-precision machining.The programme has been very well received by both industry and students, with applications from many high-calibre students.

Supplier Development

Finally, we are also focusing on Supplier Development. We are seeing growing interest from OEMs of complex equipment to set up manufacturing activities in Asia, to be closer to their customers.This will in turn lead to exciting opportunities for suppliers in the region.Singapore’s suppliers, with their strong engineering capabilities, are well positioned to take advantage of these opportunities.To further strengthen our supplier base, several agencies under the Ministry of Trade & Industry, including EDB, SPRING and A*STAR, have undertaken a coordinated effort to offer comprehensive support to both local and foreign OEMs as well as their suppliers, to develop new capabilities in Singapore through, for example, the Supplier Development Initiative and Capability Development Programme.KLA-Tencor has been our strong partner in this regard, and we look forward to working closely as we embark on the next phase of growth together.

On this note, let me congratulate the management and staff of KLA-Tencor on the opening of this new facility. I thank you for your trust and confidence in Singapore and wish you every success.It is now my pleasure to declare KLA-Tencor’s new facility officially open.

Thank you.