Singapore manufacturers stay upbeat on AI demand despite geopolitical clouds

Singapore’s manufacturers are maintaining a positive outlook on the next six months, driven by robust global demand for artificial intelligence, according to a survey released on Monday. A net weighted balance of 24% of firms expect business conditions to improve between October 2026 and March 2027, up from 12% in the previous survey.

While geopolitical developments continue to cast a shadow over the economic outlook, manufacturers across various clusters are optimistic about employment levels, with 72% expecting them to remain broadly similar in the fourth quarter. The precision engineering cluster is the most upbeat, with a net weighted balance of +48%, buoyed by semiconductor-related equipment makers anticipating sustained global AI-related investment growth.

The electronics cluster, driven by semiconductor equipment for AI applications, projects a +42% outlook. Biomedical manufacturing and general manufacturing also show positive expectations, with +14% and +7%, respectively. However, the chemicals cluster remains the most pessimistic, with a -13% expectation.

Regarding output, a net weighted balance of 34% of manufacturers anticipate an increase in production for the fourth quarter, led by electronics (+55%) and precision engineering (+54%). In electronics, semiconductors and computer peripherals, as well as data storage segments, expect higher production to meet AI data center demand. Precision engineering firms foresee growth in semiconductor-related equipment, bonding wires, and metal precision components.

Biomedical manufacturing firms anticipate higher production of active pharmaceutical ingredients and life science instruments. General manufacturing, excluding the printing segment, also expects higher output. The food, beverages, and tobacco segment is optimistic about stronger export demand for milk and beverage products.

However, export order challenges persist, with 23% of firms expecting hurdles, primarily due to price competition and geopolitical factors. The EDB survey, conducted between September and October 2026, involved 397 manufacturing establishments, with 83% responding.