Speech by MOS Teo Ser Luck at the "Synergy through MNC-SME Collaborations: Fostering Growth in the Electronics Industry” at Nanyang Polytechnic

Mr Chan Lee Mun, Principal & CEO, Nanyang Polytechnic

Mr Gregory Bryant, Vice President, Sales and Marketing Group, Intel

Mr Chandran Nair, Managing Director, South East Asia, National Instruments

Mr Simon McLean, Vice President, Sales & Marketing, South Asia-Pacific Region, NXP

Ladies and gentlemen

Good morning.

Introduction

1.               It gives me great pleasure to join you this morning.

Importance of the Electronics Industry

2.               The electronics industry is an important one for Singapore. It makes up 30% of the manufacturing sector by value add, and employs almost 80,000 people. It is also an industry characterised by rapid change. The emergence of new technological trends, such as Intelligent Machines

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, Wearable Electronics

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& Additive Manufacturing

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, coupled with the rapid growth of economies in Asia, present an abundance of opportunities. At the same time, companies in the electronics industry need to move quickly to avoid obsolescence due to advances in technology.

3.               In such an environment, MNCs and SMEs have much to gain by joining hands in partnership. MNCs, by virtue of their size, are able to provide a depth of expertise, economies of scale, and access to the latest technologies. On the other hand, SMEs, being smaller organisations, are able to operate nimbly, make quick decisions, and iterate rapidly in the development of new products. SMEs can be an important source of ideas for MNCs, while MNCs can help SMEs acquire new capabilities through knowledge and technology transfer.

Partnership Opportunities

4.               With that, let me now share about the Partnerships for Capability Transformation (PACT) initiative and how it can benefit large enterprises and SMEs. Launched by Economic Development Board (EDB) in 2010, the PACT programme encourages partnerships between global companies and their suppliers by upgrading the suppliers’ capabilities through the sourcing and qualification processes.

5.               Recognising the importance and benefits of such partnerships, the PACT programme was enhanced in Budget 2013, to expand the scope for collaboration between large enterprises and SMEs, and to include both manufacturing as well as non-manufacturing sectors

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. The programme is now co-administered by SPRING and supports collaborations between MNCs and SMEs in four key areas.

6.               Firstly, PACT supports MNCs in partner development to upgrade SMEs’ capabilities such as in technology, supply chain, customer service and productivity. Secondly, PACT facilitates knowledge transfer by supporting MNCs in sharing best practices and industry know-how with SMEs. Thirdly, with co-innovation, large organisations and SMEs can develop and test-bed new solutions to accelerate commercialisation opportunities, offer new products and services, and enter new markets. And fourthly, PACT can also support the hiring of dedicated personnel in large organisations to oversee, implement and monitor the progress of collaboration efforts with SME partners over one year.

7.               Since the enhancements to PACT in 2013, about 600 SMEs have benefitted from 84 projects under SPRING’s PACT programme

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. One example of a PACT project I’d like to highlight is with ST Kinetics, which is one of Asia’s leading land systems and specialty vehicle companies.  In Oct 2013, ST Kinetics embarked on a partnership project to upgrade the capabilities and competencies of 11 of their key SME suppliers by training them to achieve operational excellence through the Kaizen methodology, automation and mechanisation. The result is a win-win outcome in terms of shared cost savings from process improvements for both ST Kinetics and its suppliers. ST Kinetics has seen value from this initiative and is in discussions to work with the next batch of suppliers.

8.               If you are an MNC who is keen to work with SMEs to develop and test-bed new solutions, or an SME with unique product and service offerings, I encourage you to approach SPRING to take part in the PACT programme.

9.               Today, I am glad to note that Intel, National Instruments, and NXP Semiconductors will each have a full-time PACT manager to actively drive collaborations with local electronics SMEs in Singapore. The companies will work closely with SPRING Singapore and the Centre of Innovation for Electronics (COI-E) at Nanyang Polytechnic in this effort.

10.           I understand that the three companies will be sharing details of their plans for collaboration with SMEs throughout the course of the day. I hope that our SMEs will come forward to take advantage of the exciting opportunities presented. Let me touch briefly on how the 3 companies will work with our SMEs.

11.           First, Intel will be actively working with promising local SMEs on emerging areas such as Machine to Machine (M2M) solutions, wireless charging capabilities for electronic devices, smart energy usage and cloud solutions for health records. Collaboration with a global giant like Intel will not only allow local SMEs to become qualified vendors of Intel, but provide access to Intel’s vast resources and pool of customers. In addition, Intel will, as part of their Galileo University Program

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, provide Galileo boards to the COI-E for prototyping projects. Galileo boards are circuit boards that allow for rapid prototyping of smart devices

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, and are specifically designed for the use of innovators, students and educators.

12.           Second, National Instruments

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will identify, train and qualify new SMEs for their Global Alliance Partner Network. The Network comprises more than 700 independent third party companies worldwide that provide complete solutions and high quality products based on National Instruments’ graphical system design tools and modular hardware platforms. National Instruments seeks to build a strong base of local SMEs with new system development capabilities, enabling SMEs to access new markets and customers through National Instruments’ established channels.

13.           Finally but not least, NXP Semiconductors

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will be engaging SMEs in projects on smart lighting, healthcare services and Near-Field Communication (NFC). NXP will officially qualify SMEs as Electronic Design Houses, increasing their credibility and helping them access new markets. In June this year, the NXP headquarters in Eindhoven, Netherlands, hosted a delegation of SMEs co-led by SPRING and COI-E. The delegation learnt about NXP’s technologies and projects in Europe, allowing them to gain exposure to global practices.

Conclusion

14.           In conclusion, I would like to thank Intel, National Instruments and NXP Semiconductors for taking the lead to seek collaborations with our local SMEs and drive the growth of our electronics sector. The government will continue to play an active role in supporting such collaborations, as they bring important benefits to the companies participating, and to the industry as a whole.

15.           Thank you.

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Intelligent Machines are machines that use sensors to monitor the environment, and adjust their actions to accomplish tasks in the face of uncertainty and variability

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Wearables are clothing and accessories incorporating computer and advanced electronics technologies.

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3D Printing/Additive Manufacturing is the process of making 3D models through additive processes in which successive layers of materials are laid down under computer control.

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Additional manufacturing sectors include Food Manufacturing, Furniture Manufacturing and Printing, while the non-manufacturing sectors refer to the Retail, Food Services, ICT and Construction sectors.

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Figures are for SPRING’s PACT programme and are correct as of 24 July 2014.

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Under the Galileo University Program, Intel will be providing 50,000 Galileo boards to universities worldwide.

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Galileo is compatible with the Arduino open-source electronics platform that is used to develop devices that can interact with their physical environment. The platform has been used to prototype devices such as GPS car trackers, wireless home security systems, and automated home appliances.

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National Instruments is an American MNC that produces automated test equipment and virtual instrumentation software. In 2012, the company sold products to more than 35,000 companies with revenues of US$1.12b.

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Philips sold its semiconductors division to a consortium of private equity investors in 2006, and the resulting company was named NXP Semiconductors. NXP had revenue of US$4.82b in 2013. Areas of market leadership include identification hardware (e.g. RFID tags, chip-based banking cards), LED lighting drivers, and RF transceivers. It is also one of the co-inventors of Near-Field Communication.