Singapore Factory Output Rises 7.2% in June as AI Demand Drives Electronics Boom

Singapore's manufacturing sector posted another month of AI-driven growth in June, with electronics output surging 21.3 per cent year on year as global demand for semiconductors and AI infrastructure continued to power the city-state's factory floors. The latest data from the Economic Development Board, released Monday, shows that the broader economy is increasingly riding on the AI wave, even as other manufacturing segments struggle.

Total manufacturing output rose 7.2 per cent in June, falling short of the 9.3 per cent forecast by analysts in a Bloomberg poll. The electronics cluster led the charge — the infocomms and consumer electronics segment jumped 32.1 per cent, while semiconductor production grew 21.1 per cent. Computer peripherals and data storage output also reversed a previous contraction, rising 8.2 per cent. Precision engineering followed as the second-best performer, expanding 14.9 per cent on higher production of semiconductor equipment. Excluding biomedical manufacturing, overall output was up 9.6 per cent.

The divergence between electronics and the rest of manufacturing tells a familiar story. The chemicals cluster declined 11.7 per cent, with petroleum and petrochemicals contracting 10.2 per cent and 52.7 per cent respectively as feedstock supply disruptions weighed on production. Biomedical manufacturing shrank 11.4 per cent, led by a 34.4 per cent drop in pharmaceuticals due to a different mix of active ingredients being produced. General manufacturing industries fell 6.8 per cent, with food, beverages and tobacco down 16.9 per cent.

Transport engineering was the bright spot outside electronics, growing 4.6 per cent as the land segment expanded 41.2 per cent and aerospace rose 11.2 per cent on sustained aircraft maintenance demand. But marine and offshore engineering contracted 14.1 per cent, reflecting softer demand for oil and gas field equipment. The numbers point to an economy where AI-related manufacturing is increasingly carrying the load, while traditional segments face headwinds from global trade disruptions, supply chain shifts, and changing demand patterns.

Why it matters for Singapore: These figures reinforce Singapore's position as a critical node in the global AI supply chain. The sustained double-digit growth in electronics and semiconductor equipment production shows that the country's investments in advanced manufacturing infrastructure are paying off. But the sharp contraction in chemicals and biomedical manufacturing — two sectors that have historically anchored Singapore's industrial base — suggests a deepening structural shift. With the government betting heavily on AI infrastructure, semiconductor fabrication, and data centre expansion, the coming quarters will test whether these sectors can generate enough momentum to offset the decline in traditional manufacturing segments.