Singapore Manufacturing Extends 12-Month Growth Streak as AI Demand Fuels Semiconductor Boom

Singapore Manufacturing PMI Signals Expansion Fueled by AI Wave

SINGAPORE--A key gauge of Singapore's manufacturing activity expanded in July, bolstered by a wave of artificial intelligence-related demand. The purchasing managers index, compiled by the Singapore Institute of Purchasing and Materials Management, rose to 51.4 in July, slightly higher than June's 51.3. A reading above 50 signals expansion, while a reading below 50 indicates contraction. The reading reflected stronger growth in new orders, exports, input purchases and employment, though factory output posted a slower expansion, SIPMM said Monday. The latest PMI reading indicates that the city-state's manufacturing sector remains supported by the AI-driven semiconductor supercycle, which is boosting robust order inflows and employment, said Stephen Poh, executive director at SIPMM. "However, the collapse of the Middle East ceasefire has triggered a supply chain crisis, sending input prices soaring and severely crippling supplier delivery times," Poh added. The PMI for electronics, which accounts for about one-third of Singapore's manufacturing output rose slightly to 52.4 in July from 52.2 in June, driven by stronger expansion in new orders, new exports, factory output, input purchases, and employment. Manufacturing growth should continue to be supported by global AI-related tailwinds, said DBS senior economist Chua Han Teng in a recent note. Strong investments by big technology companies are driving robust demand for electronics and precision engineering products, including memory chips, server-related products and semiconductor equipment, Chua added.

World's second-richest country's manufacturing sector extends growth on AI demand

Singapore's manufacturing sector continued to expand in July despite prolonged tensions in the Middle East that have added pressure to global supply chains, with demand driven by AI remaining the key growth engine. The Purchasing Managers' Index (PMI) edged up 0.1 point from June to 51.4 last month, marking 12 straight months of expansion, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on Monday. A reading above 50 indicates expansion while one below 50 indicates decline. Within manufacturing, the PMI for the linchpin electronics sector grew by 0.2 points to 52.4, marking the 14th consecutive month of expansion. The sector's new export orders index climbed to 52.6 in July, its highest level since mid-2018. Meanwhile, the finished goods index remained in contraction for a third straight month, indicating inventories continued to be kept lean. Economists noted that both the headline manufacturing PMI and the electronics PMI reached their highest levels since November 2018 and January 2018, respectively. The latest data suggest the manufacturing sector of Singapore, ranked the world's second-richest country by GDP per capita in 2025 by The Economist, continues to benefit from the semiconductor "supercycle", fuelled by rising investment in AI. Strong demand for chips and electronic components has boosted new orders while supporting hiring across the manufacturing sector. Economists expect AI-related demand to remain the main driver of manufacturing growth in the near term although the benefits are likely to remain concentrated in electronics and related industries. The momentum has largely offset headwinds from higher energy costs and U.S. tariff policies. Robust investment by hyperscale cloud service providers in the second half of 2026 is expected to further drive demand for Singapore-made electronics products, including memory chips and server-related components.