Navigating US Tariff Uncertainty: Strategic Opportunities in Singapore's Resilient Manufacturing Sector

Singapore's manufacturing sector has demonstrated remarkable resilience in Q2 2025, expanding by 5.5% year-on-year despite the headwinds of U.S. tariff escalations and global trade volatility. This growth is driven by three key sub-sectors—electronics, precision engineering, and biomedical manufacturing—each underpinned by government support, strategic infrastructure, and global demand for high-value goods. For investors, the challenge lies in identifying undervalued equities and infrastructure plays that can withstand trade turbulence while capitalizing on structural tailwinds.

The Resilient Sub-Sectors: Electronics and Precision Engineering Lead the Charge

The electronics sub-sector, particularly semiconductor fabrication, remains a cornerstone of Singapore's manufacturing growth. Government-backed initiatives, such as the $1 billion 2025 budget allocation for chip manufacturing, have solidified the city-state's position as a regional hub for advanced semiconductors. Companies like Tower Semiconductor (TSEM) and ST Engineering (STI) are at the forefront of this boom. Tower Semiconductor's Q2 2025 results highlight its strength: revenue rose 6% year-on-year to $372 million, with net profit hitting $47 million. The company's focus on RF infrastructure and AI-driven demand positions it to outperform in a sector otherwise vulnerable to U.S. tariffs.

Meanwhile, precision engineering has emerged as a less volatile but equally critical sub-sector. Demand for advanced robotics and automation tools has surged, driven by global supply chain modernization. Keppel Offshore & Marine (KMP) exemplifies this trend, leveraging its export linkages to ASEAN and Europe to insulate itself from U.S. trade risks. In H1 2025, Keppel's net profit surged 25% year-on-year to $431 million, bolstered by its Infrastructure segment and asset monetization strategies. Its $500 million share buyback program and 15.4% ROE underscore its appeal as a value play.

Biomedical and Logistics: Diversification Amid Uncertainty

The biomedical sector has grown by 6.8% year-on-year, fueled by Singapore's life sciences parks and government incentives for vaccine and bioscience R&D. While not directly tied to electronics or precision engineering, this sub-sector offers complementary opportunities. For instance, Biolidics (B08.SI) is gaining traction in nucleic acid therapeutics, a field supported by the National Nucleic Acid Therapeutics Initiative (NATi).

Logistics and transportation, meanwhile, have expanded 10.2% year-on-year, leveraging Singapore's role as a global supply chain node. SATS (SATS) and CWT Logistics (CWT) are prime beneficiaries. SATS's recent expansion of Changi Terminal 5 and its 777F cargo route to Anchorage highlight its strategic edge in air freight. CWT Logistics, with its multimodal solutions and focus on e-commerce, is capitalizing on Singapore's digital logistics infrastructure, including the Tuas Mega-Port.

Undervalued Equities: Balancing Risk and Reward

Investors seeking exposure to Singapore's resilient manufacturing sector should prioritize companies with global R&D footprints, diversified export markets, and government-backed infrastructure. Here are five compelling names:

1. ST Engineering (STI)
2. Why Invest? A leader in aerospace, electronics, and precision engineering, ST Engineering benefits from AI and 5G demand. Its 2024 performance, driven by cost discipline and productivity gains, sets a strong foundation for 2025.

3. Valuation Check:

4. Tower Semiconductor (TSEM)

5. Why Invest? With a 6% revenue growth in Q2 2025 and a 15.4% ROE, Tower Semiconductor is well-positioned to capitalize on AI-driven semiconductor demand. Its global manufacturing footprint (Israel, U.S., Japan) mitigates regional risks.

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7. Keppel Offshore & Marine (KMP)

8. Why Invest? Keppel's 25% net profit growth in H1 2025 and $915 million in asset monetization highlight its strategic pivot to infrastructure and asset management. Its 15.4% ROE and share buyback program enhance shareholder value.

9. SATS (SATS)

10. Why Invest? SATS's 10.2% year-on-year logistics growth and expansion into the Middle East (via its 49% stake in SATS Saudi Arabia) position it to benefit from global air freight demand.

11. CWT Logistics (CWT)

12. Why Invest? CWT's focus on e-commerce and high-value logistics, coupled with Singapore's digital infrastructure, makes it a strong play on regional supply chain resilience.

Infrastructure Plays: Building for the Future

Singapore's infrastructure investments are critical to its manufacturing resilience. The PSA Supply Chain Hub @ Tuas and Tuas Port are enhancing logistics capabilities, while the Jurong Innovation District is fostering advanced manufacturing clusters. For investors, infrastructure equities like SATS and CWT offer exposure to these developments. Additionally, government grants for SMEs ($200 million in October 2025) and potential MAS monetary easing could further bolster the sector.

Risks and Mitigation Strategies

While Singapore's manufacturing sector is robust, U.S. tariff policies remain a wildcard. The Inflation Reduction Act's Section 232 tariffs could reduce non-oil exports by 5–10%, impacting electronics and chemical sectors. To mitigate this, investors should:
- Diversify across sub-sectors: Prioritize precision engineering and biomedical firms (e.g., Keppel, Biolidics) over electronics-heavy plays.
- Monitor policy signals: Track October 2025 tariff reviews and MAS policy adjustments.
- Leverage regional linkages: Focus on companies with ASEAN and European export ties (e.g., ST Engineering, CWT).

Conclusion: A Strategic Hub in a Shifting World

Singapore's manufacturing sector is a testament to strategic foresight and adaptability. By investing in undervalued equities like ST Engineering, Tower Semiconductor, and Keppel, and infrastructure plays such as SATS and CWT, investors can navigate U.S. tariff uncertainty while capitalizing on long-term growth drivers. As global supply chains evolve, Singapore's position as a high-value, trade-resilient hub will remain a compelling narrative for those willing to look beyond short-term volatility.